CBI raids: Raja quotes TRAI,facts contradict

The operations continued until late this evening in Delhi,Mumbai,Ahmedabad,Mohali,Gurgaon,Jaipur,Chennai,Noida and other locations.

Denying any wrongdoing,Raja defended allocation of licences to new operators in January 2008. All decisions on spectrum licensing have been taken in accordance with procedures laid down by the Telecom Regulatory Authority of India and in consultation with the Prime Minister.

Not quite. A scrutiny of recommendations by TRAI in 2007 by which Raja swears and even earlier in 2003 show that the DoT made significant departures.

For instance,TRAI has consistently said that new licences be granted only through auctions. However,new licences were granted to Unitech Wireless,Swan Telecom (now Etisalat DB),Loop Telecom,Sistema Shyam,Datacom,S-Tel,Allianz Infratech and Spice Telecom in January 2008 on a first-come-first-served basis at a price discovered way back in 2001 when a fourth cellular operator was added to each circle.

Justifying this move,Raja and his officials have repeatedly pointed to TRAIs August 2007 recommendations,which suggest that Trai did not favour auctioning 2G licences. Again,this is inaccurate. What TRAI said was that it did not favour the auction of spectrum in the 800,900 and 1800 bands (currently used for 2G services).

Also,DoT blurred the distinction between auction of licences and auction of spectrum. Since the opening of the telecom sector to private players,licences have been auctioned while spectrum has not. Thats because TRAI feels auctioning of licences can obtain a market-determined price,which then justifies not auctioning the spectrum.

This is what Trai stated in 2007: The entry fee as it exists today is,in fact,a result of the price discovered through a market mechanism applicable for the grant of licence to the fourth cellular operator. In todays dynamism and unprecedented growth of (the) telecom sector,the entry fee determined then is also not the realistic price for obtaining a licence. Perhaps,it needs to be reassessed through a market mechanism.

Theres another key area where Raja deviated from Trais 2007 note,which helped companies like Swan and Unitech offload 45% and 60% equity,respectively,in favour of foreign telecom majors at exponential valuations without even having basic infrastructure in place.

Trai had clearly recommended that any proposal of permission of merger & acquisition should not be entertained until the rollout obligation is met.

The rollout obligation mandates that at least 10% of a circle be covered within a year of obtaining a licence and 50% within three years. If Raja had accepted this,Swan and Unitech would not have been able to divest any stake.

However,DoT tweaked the Trai recommendation and disallowed only total acquisition for three years,but permitted stake sale up to 74%,which is allowed under the FDI policy. Later,facing criticism,DoT disallowed promoters of new licensee firms from selling their stake for a period of three years. But by this time,Swan and Unitech had already made a killing.