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BW Businessworld

2G: SC Fiat To Govt, Tele Cos

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Unsuccessful bidders and telecom companies which opted out of participating in the first round of fresh auction for 2G spectrum following cancellation of their licences by last year's order would not be allowed to continue their service, the Supreme Court said on Monday, 11 february, 2013.

The verdict could affect Sistema Shyam Teleservices Ltd (SSTL) which did not take part in the first round of auctions. The company said till it received the formal order from the Supreme Court, it would not be able to react properly.

“Sistema Shyam TeleServices Ltd (SSTL) is awaiting the formal order by the honourable Supreme Court on the extension of the telecom licences till the conclusion of the fresh auction process for grant of licences and allocation of spectrum. Till that time, it will not be possible for SSTL to provide detailed comments. The immediate priority for the Company is to carefully study the recently released Notice Inviting application (NIA) and accordingly come up with a view on the spectrum auctions, starting 11th March. As the process gets closed, we will come back to you,” read a statement issued by the company.

A week ago, Russian oil-to-telecoms conglomerate Sistema had said the licences of its Indian mobile subsidiary had been extended until a further Supreme Court hearing on March 11.

Sistema has invested more than $3 billion in India as a telecom operator that operates under the MTS brand. It was the only operator that got a license for CDMA operations in 2007 and since then had been increasing its services and investment in India. But the company was sucked into the 2G scam. When the Supreme Court cancelled the licenses of all operators that were deemed to have received licenses in questionable circumstances, Sistema was included.

Earlier in November 2012, Communications and IT minister Kapil Sibal had sent a note to the new law minister Ashwani Kumar to be prepared for a legal battle with Russia’s Sistema over cancellation of its 21 licences. In his letter Sibal says “Sistema JSFC, Russia may seek arbitration, hence it is important to take all requisite necessary measures like appointment of arbitrator, finalisation of legal team/counsel, firming up the stand of the Government for any eventuality.” Sibal has asked Kumar to expedite the “finalisation of panel of arbitrators from the Indian side having domain knowledge of telecom.”

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Govt Must Take A Position
On 11 February, the apex court asked the government to take a position on the issue and made it clear that those telecom companies which continued with their operation after the February 2, 2012, verdict will have to make payment on the basis of reserved price fixed for the fresh auction.

The court by its various interim orders allowed the telecom companies whose licences were quashed by the verdict to continue with the operation till the fresh auction for 2G spectrum was completed.

"You (Department of Telecommunication) have to take a position on those who have been unsuccessful in auction conducted on November 12 and 13, 2012. They cannot be allowed to operate in the events when there are bidders who have been successful.

"Those who did not go for the bid are also not entitled to continue," a bench comprising justices G S Singhvi and K S Radhakrishnan said while reserving its order on the issue.

The bench said allowing those who were unsuccessful and had not participated in the auction to continue with operation would generate more litigation.

It said auction will have to be done for all those licences for the 2G spectrum for which letters of intent were issued on January 10, 2008 and were quashed by the apex court's February 2, 2012 judgement.

"Whatever spectrum were released as a result of the quashing of licences must be put on auction," the bench said, adding that it was only concerned with the 1800 MHz and 800 MHz band and not with 900 MHz.

The apex court noted that one or the other telecom companies were coming up with different interpretations of its order and said, "We will not appreciate that there is always cartelisation in this matter. Some are trying to frustrate the process of auction."

Meanwhile, Sistema Shyam Teleservices Ltd said it will take a decision on February 22, to choose the circles when the process for second round of auction will commence which is scheduled for March 11.

The apex court on January 14 had extended till February 4 the January 18 deadline for existing operators of 2G spectrum to carry out operations. The deadline was further extended till further orders.

The court in the earlier hearing wanted the Centre to spell out the price to be charged from the telecom companies for continuing with their services after cancellation of licences last year.

The apex court had on February 2, last year cancelled 122 licences for the 2G spectrum and had directed the DoT to hold fresh auction for them within four months which has been extended by interim orders from time to time.

During the hearing, the bench had observed that the telecom operators enjoyed the benefit of its order to continue with operations till the fresh auction and they are liable to pay the reserved price after January 18, 2013.

The court also said the decision to reduce the bidding price after the first round of auction for spectrum is bound to evoke further litigation.

Prashant Bhushan, appearing for the NGO, Centre for Public Interest Litigation (CPIL), which was one of the PIL petitioners on whose plea the licences of 2G were cancelled, said existing operators should not be allowed to continue as consumers have the option to move to other service providers.

The Centre had asked the court to consider allowing telecom operators, whose 2G licences were cancelled last year, to continue to operate after the January 18 deadline with a condition that they "will be liable to pay" for the spectrum as per the proposed price of the upcoming auction on March 11.

The Department of Telecom (DoT) had stated its stand in an affidavit which assumes importance as the court has permitted the telecom operators to continue to operate till January 18.

The DoT had asked the apex court to consider allowing it to grant "temporary licences" to such operators till the completion of the fresh bidding process.

It said this plea could be taken into account if the court decides not to extend any further the January 18 deadline as "such an arrangement will avoid disruption of services to the subscribers on one hand and safeguard public revenue on the other".

As per the apex court order, 21 licences of Sistema Shyam Teleservices (MTS), 16 permits of Telenor controlled Uninor, 15 of Videocon and 3 CDMA permits of Tata Teleservices were to stand cancelled from January 18, with around 25 crore subscribers in the country.

Telenor is in the process of transferring the business of Uninor in 6 circles to new entity Telewings Communications, which recently won spectrum.

The apex court had on November 27 last year said that the telecom operators, whose licences were cancelled by it but continued to operate due to delay on government's part to hold fresh auction of 2G spectrum, might have to pay for using the radiowaves on the basis of current price.

The apex court had on February 2, 2012, quashed 122 2G licences while allowing telecom operators to run their services for four months after which the order was to become operative.

The date expired on May 2 but the apex court allowed the operators to continue providing services as the Centre failed to put the spectrum on auction which was done only on November 12, 2012.

(BW Online Bureau & Agencies)