Recent 5G spectrum auctions- Post-tender developments erode the credibility of the auctions

 5GSpectrum

To

Shri K Rajaraman

Secretary (Telecommunications)

Govt of India

Dear Shri Rajaraman,

I had earlier addressed the Comptroller & Auditor General of India (C&AG) to scrutinise the recent 5G spectrum auctions, keeping in view the absence of any worthwhile competition, which diluted its credibility, as also the post-tender relaxations allowed, that had the effect of vitiating the sanctity of the auction process. I had marked copies of my letters dated 13-8-2022, 15-8-2022 & 26-8-2022 to you, which are also readily accessible in the public domain at (https://countercurrents.org/2022/08/5g-spectrum-why-the-relaxation-of-security-conditions-in-border).

I have just come across a report (https://economictimes.indiatimes.com/news/india/finance-ministry-okays-vi-dues-conversion-to-govt-equity/articleshow/94061464.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst)) that the Finance Ministry has cleared a proposal to convert Vodafone Idea’s Rs 16,130-crore worth of accrued interest dues on deferred adjusted gross revenue (AGR) into equity, which in effect makes Government of India the single largest equity holder in the company, with an equity share of 33% in the company. This proposal had been with the Finance Ministry since January, 2022 and, as such, when the company submitted its bid in August, both the government and the company were fully aware of this.

On the other hand, in the Notice Inviting Applications vide communication No. 1000/5/2021-WF dated 15-6-2022, your Ministry had specifically incorporated the following condition in Annexure M (Format for Ownership Compliance Certificate):

Promoter shall mean legal entity other than Central Government, financial institutions and scheduled banks, which hold 10% or more equity in the licensee company

Conversion of equity, based on a proposal which was pending before the government at the time of the auctions and should therefore be deemed to have taken place by then, amounts to an alteration of the ownership pattern, not perhaps transparently disclosed in the bid documents. If this is true, it could be considered a change in the pattern of ownership that raises concerns about the sanctity of the auction process.

It is also a matter of concern that the bidding format should allow bidders with a heavy debt to bid for valuable spectrum.

I had already raised concerns about the lack of  adequate preparation before the auctions, diminishing the role of the telecom CPSEs, conducting auctions in a hasty manner ignoring the potential use of the spectrum for defence and several other strategic applications, inadequate competition and the post-tender relaxations, which have collectively eroded the credibility of the auctions. This latest development of an altered ownership pattern raises similar questions.

I request the Department of Telecommunications to take the C&AG and the Parliament into confidence on these concerns.

Regards,

Yours sincerely,

E A S Sarma

Former Secretary to Government of India

Visakhapatnam

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