India's Supreme Court orders the country's 2G licences to be scrapped and re-auctioned

The Supreme Court of India has cancelled 122 telecoms licences that were awarded in a 2008 spectrum sale.

The government has claimed that corruption marred the sales process, with former cabinet minister Andimuthu Raja currently in jail awaiting trial for his role in the scandal.

In line with this the Supreme Court of India has now declared the licences are null and void and has ordered an auction to be held within four months.

The 122 licences issued 2008 were sold on a first-come first-serve basis at prices predetermined in 2001. However, the Supreme Court has now ruled that the government should not have issued the licenses on such a basis and should instead have carried out a public, transparent auction, which would have meant the country could generate more revenue from the spectrum sale and would minimise corruption.

The 2008 sale was primarily intended for new entrants to the market, but also for some existing larger operators to expand their coverage. Norway’s Telenor and Indian real estate company Unitech set up a joint venture in India, Uninor, which was allotted 22 pan-India licences during the sale. Loop Wireless, Videocon and Sistema-Shyam were also awarded 21 licences each, while Etisalat bought 15 licences. Idea, S Tel and Tata were awarded nine, six and three licences respectively.

Each of the operators are allowed to continue offering their services for the next four months, while the country’s telecoms regulator TRAI devises new guidelines for the auction process and determines what to do with the transition of assets between current licence-holders and new licencees. However, they could all potentially stand to lose their investments, according to Anubhuti Belgaonkar, senior analyst with Informa Telecoms & Media.

“It’s looking like they could lose all of their investments, but once the regulator comes out with guidelines, there will be more clarity about what kind of losses these operators will make. It’s still not very clear,” she said.

Uninor said in a statement that it is “shocked” that it will be penalised despite not being involved in any wrongdoing.

“We have been unfairly treated as we simply followed the government process we were asked to,” the company said in a statement.

“We are shocked to see that Uninor is being penalised for faults the court has found in the government process. We will study the order in detail and exercise all options available to ensure that Uninor continues to operate in India.”

A special Central Bureau of Investigation court is continuing to probe the matter.

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