He has been sat in a cell for over a year, refusing to post bail and stands accused of taking bribes to sell spectrum to prospective mobile operators at discounted rates; “virtually gifting away an important national asset at throw away prices” in the words of a Supreme Court Council of Ministers.

India’s 2008 2G licence sale was intended to attract foreign investors into India, and after spectrum was purchased by Indian companies, a number of overseas players did indeed entere the fray. Norway’s Telenor, Sistema of Russia, Etisalat of the UAE and Batelco of Bahrain all joined forces with Indian businesses to launch services to the country’s 1.2 billion-strong population.

Telenor partnered with an Indian real estate firm, Unitech, which bought spectrum in the 2008 sale, while Etisalat set up a JV with Swan Telecom, a new company set up by the founders of another real estate firm, DB Realty. Reliance Telecom also subsequently purchased a 9.9 per cent stake in Swan Telecom.

Swan and Unitech are alleged to have played a part in the corruption scandal, which leaves their foreign partners twisting in the wind.

Special public prosecutor U.U. Lalit, representing the Central Bureau of Investigation (CBI), questioned the circumstances in which the spectrum was acquired:

“Swan Telecom and Unitech got the telecom licences despite their complete ineligibility [to use them]. Both the companies off-loaded their shares soon after getting the licences and garnered around Rs 7,300 crore ($1.48bn) in the process,” he told the Supreme Court.

Meanwhile, Shyam Telelink Limited and Shyani Telelink Limited decided to operate together with their combined 21 licenses, and during late 2008, Russia-based group Sistema bought majority stake in the company, which now operates under brand name MTS India.Bahrain’s Batelco set up a subsidiary company, BMIC Limited, which acquired 42.7 per cent equity in STel for BD65.8m ($174.5m).

Now though, all of the companies that bought spectrum are set to lose those licences, and no form of compensation is on the cards.

Telecoms.com understands that the companies now under investigation by the CBI are Unitech, Reliance Telecom, Swan Telecom, Loop Telecom and Essar. Energy group Essar was found to have a controlling stake in Loop while also holding a stake in Vodafone.

It has been suggested that Unitech and Swan Telcom sold stakes in their firms to Telenor and Etisalat at much higher rates than acquired them for. Telenor Group injected INR 61.35bn ($1.25bn) operating capital directly into Unitech Wireless to take a majority stake in the company. Etisalat has said it invested more than $1bn into Etisalat DB. It has been reported that Unitech’s 22 Pan-India licences cost a mere Rs.1,658 crore ($337m) at the time of purchase.

For now the foreign investors are not being accused of conniving in any part of the scandal. In addition to the fact that they all paid higher rates for access to the spectrum, there was apparently little or no suspicion of any corruption in the 2G spectrum allocation at the time that Etisalat and Telenor decided to invest. And they, it seems, did not find any cause for concern when they did their due diligence.

Having blundered into this mess, they now face the prospect of losing substantial investments; and of being forced to lay out more capital if they want to stay in a market where they have built significant subscriber bases. They couldn’t be blamed if they decided to write the whole thing off as a bad job, but they seem motivated to pursue their Indian adventures.

Telenor’s VP for group communications for mobile, Tor Odland, told Telecoms.com: “We definitely don’t think of it as a lost cause. It will be challenging but we are inspired to continue.”

Batelco has exited the Indian market in the short term, selling its stake in STel to Indian firm Sky City Foundation Limited for the same $174.5m that it acquired it for. However, the Bahraini operator intends to re-enter the Indian market after the sale is complete and said that it is open to other opportunities later down the line.

Etisalat has written off a figure of $827m, the value it places on its operation in India, and warned that it may suffer a further financial impact as a result of the scandal, but the UAE operator said it is still considering its strategic options in India.

As if to rub their noses in it, the new Indian telecoms minister seems breezily unconcerned about their plight.In comments to the local press Kapil Sibal said: “Protection of interests is not the function of the government. Any party that feels aggrieved can approach the courts.”

(This appears to be at odds with what is happening elsewhere in the country, as India has recently liberalised foreign investment regulations in many of its key sectors, opening up commodity exchanges, credit information services and aircraft maintenance operations to foreign firms.)

The extent of corruption in India has now presented itself on a world stage, and if the allegations made against Raja and the other defendants in this case are true, it suggests that fraud and corruption are still a deep–rooted problem in India – just not enough of one to deter foreign investors like Telenor and Batelco. It seems strange that the aggrieved foreign investors are not making more of a fuss about their losses.

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.

Airtel plans to expand in Africa

Indian operator Bharti Airtel will rely on Nokia Siemens Networks (NSN) to expand, plan and operate its mobile networks in seven African countries as part of a deal struck between the two companies.

The operator, which provides services in 19 countries across Asia and Africa, has contracted NSN to expand its 2G (GSM/EDGE) networks and deploy 3G networks in the countries. NSN will manage end-to-end network operations, including planning, designing and implementing the 2G and 3G networks for Airtel.

The company will provide its energy-efficient Flexi Multiradio Base Stations to expand network coverage to under-served areas, including smaller towns and villages in  Madagascar, Malawi, Congo Brazzaville, Kenya, Tanzania, Uganda and Zambia.

“This partnership will further enable us to rapidly expand our network coverage and provide high-speed wireless internet connectivity to our customers,” said Manoj Kohli, CEO and joint managing director at Bharti Airtel.

NSN will use its FlexiHybrid microwave radio to address growing data traffic and provide the platform for a cost-effective transition to 3G, and potentially 4G networks in the future.

It will also provide its NetAct network management system for to enable network monitoring and management.

Financial details were not disclosed.

Belgium's fourth 3G licence has been granted to a consortium

Belgium’s fourth 3G licence has been granted to the sole bidder for it, Telenet Tecteo Bidco. The consortium, made up of cable operators Telenet and Tecteo, paid €71.5m for the licence, which also gives options on GSM spectrum.

As the sole bid, Telent Tecteo Bidco’s offer matched the minimum pricetag placed on the spectrum by regulators. Bidco now has two blocks of 14.8MHz in the 2.1GHz band; it also intends to avail of its option to buy two blocks of 4.8MHz in the 900MHz band, along with 2x10MHz in the 1800MHz band – both highly-prized – for which it will pay €31.5m in 2015.

The licences are technology-neutral and, as such, are likely to see the consortium make a play in the LTE space. Telenet, an MNVO with over 200,000 customers, has said the purchase means it is now “ideally positioned to benefit from the anticipated growth in mobile data.” Belgium lags behind the rest of Europe on mobile penetration rates, thanks largely to low smartphone usage and a relative lack of competition between the existing operators. Telenet has been looking to expand its reach in Belgium, offering competitive pricing plans and handset subsidies; in a press release, the telco said its bid for the spectrum signified its intention to improve its “challenger position in the mobile market and will allow for the roll-out of high-speed mobile data networks such as LTE.” It added that owning spectrum gave it an insurance policy against future capacity constraints as well as opening up the possibility of partially or fully trading its assets.

The company said it intends to seek “more intense collaboration” with existing operators. Payment for the licence is to be made on an annual basis over the lifetime of the usage rights agreement, which expires in 2021, along with the other 3G licenses awarded to date.

In related news, leading local operator Belgacom has started upgrading its mobile network to LTE. The company said a limited group of Belgacom professional customers will be able to use the service immediately via USB modems, although the company will not launch a commercial offer proper until there are enough devices on the market that support 4G and there is sufficient demand from consumers and companies.

Belgacom is using the existing 1.8 GHz frequency band for the 4G rollout with coverage in Hasselt, Mons, Waver and the industrial park of Haasrode.

The operator has also partnered with with Spanish company Fon with an eye to building the largest wifi community in Belgium. Currently, the Fon Community has more than four million members worldwide and Belgacom will offer this service to its internet customers before the end of the year.

Published by ZTE Corporation

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