Anil Dhirubhai Ambani Group ( R-ADAG) launched the GSM mobile telephone services recently. The mobile service will span across 11,000 towns and over 340,000 villages with a capital infusion of Rs10,000 crore.
This was a strategic move to prepare for the third generation services (3G). Reliance Communication s CDMA network currently spans over 20,000 towns and with its GSM mobile service it will double its coverage over the next few months – according to an official statement. (CXOTODAY)
No, it is not Pakistan. It is the Indian media.
Look what Prabhu Chawla has to say in response to a question.
What is your view on Rs 100,000 crore telecom scam in allocation of 2G spectrum? Why is the media not taking up this issue of monumental loss to the nation and benefits to companies owned by minister and the ruling party?
Prabhu Chawla Answers…
Media has written enough on this subject and we carried a big story last month. But the media has to be given clinching evidence in this case.
We are not asking the media to do a sting. We expect it to persistently raise this issue to the PMO and FM, to the CVC, TRAI, and other institutions. If such questions expose the toothlessness of these institutions, then so be it.
Dollar billionaires created holding just a piece of paper. No one, including you Mr Prabhu can dispute it. National assets sold for their real value to foreign players via real estate companies acting as intermediaries. No one, including you disputes it. We do not know if there is a fire, but we sure can see the thick smoke billowing.
Yet, you want evidence to even ask these questions. You have not written enough.
Can you blame our enemies (the cross border variety) from adopting the same ‘give me evidence’ tactics ?
I sat in front of the computer. WordPress jumped to life. The topic on my mind was Pakistan. This was going to be an effortless post. Some server would host a few extra bytes of nonsense in a few minutes. Just when I started to type the first characters, I heard a commotion outside in the street.I went up to the window and looked out into the real world.
Nagpur, Dec 23 (IANS) Cutting across party lines, Maratha legislators in Maharashtra Tuesday made common cause to demand inclusion of their community in the ‘other backward classes’ (OBC) category and extension of reservation facility in education and jobs.
Several Maratha members of both houses of the state legislature, attending its winter session in this second capital of the state, held demonstrations at the Vidhan Bhavan premises in support of their demand.
Former chief minister Vilasrao Deshmikh, also a Maratha, told reporters that his government had assured the community of sympathetic consideration of the demand.
The demonstrations were led by Pandurang Phundkar of the Bharatiya Janata Party and Bhai Jagtap of the Congress.
Source : Mangalorean (emp mine)
I lost all interest in writing about big ticket issues.
I have been following this issue for a while now. It appears that the issue has now matured. There is no going back. 25% of Maharastrians are going to leave free-agent voter-hood.
You cant fault the Marathas either for wanting to be included in the list.If X can have it just for being X, why cant Y have it for being Y ? We cant apply reason and measurement selectively.We passed that fork in the road long back.
The Prime Minister says so :
Minority Affairs Minister A R Antulay, under attack for his remarks on Maharashtra ATS chief Hemant Karkare’s death, appears to have been let off the hook today with Prime Minister Manmohan Singh saying the matter should be “allowed to rest”.
“I think to err is human…The matter should be allowed to rest,” Singh said speaking to reporters after the sine die adjournment of the Parliament session which was dominated by the opposition demand for the sacking of Antulay.
The Prime Minister said that Home Minister P Chidamabaram’s detailed statement has put to rest any doubts regarding the killing of Karkare.
“The Home Minister has categorically stated that any doubts he (Antulay) had, have no basis,” he said.
Source : PTI
I agree with the PM. Tomorrow is the last day of the monsoon session of Parliament. The spectrum scam is almost buried thanks to Antulay-ji. I guess it is time to forgive and forget and promote a spirit of sharing.
The Indian state lost big, dollar billionaires were created out of thin air. No one seems to dispute that. Yet, there is no word from the PM or FM. This is what the 100K Cr spectrum scam is was all about. Sukh Ram was hounded for causing a loss of Rs 2 Crore to the exchequer. Thats right ! We have come a long way, haven’t we ?
The corrupt state of India is like a giant flying octopus.. If you want to change its nature you have to grab on to something real, like a dangling tentacle. If you can hold on to the tentacle and patiently climb up, you can kill the monster. Antulay’s outburst does not mean much. It is not anything concrete, it is just words that can at best lead to ‘Gee it came out all wrong, sorry’. It is like a jet of ink that confuses and prevents us from holding on to a tentacle.
This is my last post about the scam. This was the best tentacle we had in a while. Sad to see it go.
DoCoMo picked up an 26% chunk of Tata Teleservices for USD 2.7 Bn. Another multi billion dollar company created with cheap spectrum.
Article in a foreign magazine Comm.Ae –
Valuations in India continue to remain fluid, in particular with respect to greenfield opportunities. For example, the GSM licences that the likes of Telenor and Etisalat have participated in were offered at a fraction of the price that they were deemed to have been worth. So much so that earlier this year India’s regulator was accused by the finance ministry of selling 2G spectrum in January at onequarter of the market value, thereby losing approximately INR250 billion (US$5.7 billion) in income in the process.
The Department of Telecommunications (DoT) awarded the pan-India 2G spectrum in January to new licencees at what was alleged to be a price equivalent to the price of the spectrum in 2001amounting to INR16.51 billion.
The finance ministry had earlier opposed the move to sell 2G spectrum below market rates, saying the additional INR250 billion would have relieved as much as 60 per cent of India’s revenue deficit in the 2008 financial year.
Source : Comm.Ae (emphasis added)
Actually, the loss is INR 600 billion at the lower end of the estimate. Anyway, we get the point.
Telecommunications Employees Progressive Union comes out with a booklet in support of the scam called “Spectrum : Myth and Reality”. The Hindu prominently features this item. No mention of what the reality is and what the myth is.
In fact, the union launched a counter attack saying that there existed a strong cartel of existing operators before Raja took over as it was always maintained that there was no spectrum to bring in new players.
“Not only a cartel was maintained in telecom sector, there was a surreptitious play have also been done all along by claiming that there was no spectrum for expansion. Could you imagine the real loss incurred financially and technically to this country by this coffer play?” the booklet said.
Source : Hindu
Firstly. Cartel or no cartel. That is not the question. Did the government lose Rs 100K Crores or not ? There are ways to break the cartel without causing this huge revenue loss.
The second point is not worth responding to. What they are saying is this, yes we caused revenue loss, but why only pick on the spectrum allocation. What about the “cartel” causing revenue loss ? If they can do XYZ and escape why cant we do ABC and escape ?
At this point everyone agrees the government and the poor people of India lost BIG. There are only alibis being offered. It is time the PM responded to this issue.
It is not too late now. The Telenor, the DOCOMO, and the Etisalat deals have to be scrapped. The cash returned to their respective owners. These companies should either roll out on their own or surrender their licenses so they can be sold for their actual value. If they are too small to offer services on their own, they should not even be allowed to play this game.
The PM and former FM continue to maintain absolute silence on this. They are waiting for this news to blow away and they will be rewarded with this outcome in due time. Incredible India.
There is some talk in the Acorn about the RBI Governor and robust institutions. We agree, but we also think the train has left the station. Everyone, including the RBI governor has to look the other way when some things happen.
Was the RBI Governors’ advice ignored ?
It is obvious beyound any reasonable dout that Telecom Minister Raja ignored everybody’s advice on the subject. It is also reported that Raja went against the advice of the RBI Governor Subbarao. He had written to Raja to “kindly review the matter and revert to us as early as possible with responses to the above issues. Meanwhile all further action to implement the above licenses may please be stayed.”
Raja also repeatedly ignored the advice of TRAI. In 2007, TRAI had had recommended, “In today’s dynamism and unprecedented growth of the telecom sector, the entry fee determined then (2001) is also not the realistic price for obtaining a license. Perhaps it needs to be reassessed through a market mechanism.” TRAI Chairman has stated that “TRAI has never recommended first come first serve for award of new licenses.” Also, TRAI had suggested that permission for mergers and acquisitions should not be entertained unless “rollout obligation is met” which also makes a lot of sense.
Blog Source : Customer and Management Blog
More blog coverage
The PM and former FM still have not come out with a statement about the Rs 55,000 Crore scam.
1. The Rs 60K Crore direct revenue loss to the government : No one is denying this loss. Sure, it can be justified as startup concession. That only means that the loss happened due to the startup concession.
2. The profits made by the private entrepreneurs merely by holding the above paper. No one seems to be denying this either.
The Prime Minister must come out with a statement. Remember, we did not elect the Telecom Ministry, Home Ministry separately. Everyone is part of the UPA.
CPM Press Release
The left really deserves kudos for their exemplary work on exposing this scam. The BJP seems to be reluctantly tagging along. This is their latest press release.
Institute Immediate Probe
While the Minister of Communications continues to mislead the Parliament and the larger public by obfuscating matters, what is more disturbing is the deafening silence on the part of the Prime Minister on this issue. That there has been an enormous loss to the national exchequer due to the arbitrary allocation of 2G licenses is incontrovertible. Responsibility for the huge loss to the national exchequer must be fixed and concrete steps undertaken to recover the amount from the beneficiaries of the scam.
In the light of the material being made public, the CPI (M) demands immediate action on the part of the Prime Minister in this regard. Failure to initiate probe into the matter and fix responsibility, undertake steps to retrieve the lost revenues and review the entire gamut of spectrum allocation policies would make the entire Cabinet complicit with this gigantic scam.
Source : CPI-M Press Web Site
The Reliance Communications’ story is an interesting one. And the company’s explanation for the events is so beyond the realm of normal expectations, it can only be classified as a Black Swan event, to use Nassim Taleb’s classification — an event so rare, it happens once in a millennium.
– – –
Reliance ADA, for the record, has a different explanation for things, an explanation that is also quite worrying. According to Reliance ADA, a very large group of builders (Dynamix Balwas own the Meridien Hotel in Mumbai and the Hyatt in Goa) approached it to say there was a possibility of getting a telecom licence; but since the builders had no telecom experience, it was decided Reliance ADA employees would be directors of Swan, the firm chosen to apply for the spectrum. According to Reliance ADA, since it was in the telecom business and felt it could do business with Swan if it got a licence (Swan could, for instance, rent out its telecom towers), it didn’t mind doing this.
Source : Business Standard
I switched TV channels today see if any one was running a story on this giant among scams. CNN-IBN, NDTV, TIMESNOW, none of them even mentioned it. My guess is because the PM and former FMs have been in the loop according to the minister.
This is a great chance for UTVI + Business Standard to shake up the other media houses.
Well, it turns out that corruption is no longer a middle class issue. The latest trend is to ‘demand accountability from elected leaders’. What if I told you that the NIA is going to be worthless and that we will have no police reform. Sure, we will make a half hearted attempt. Sure, this attempt at building a brand new institution is worth blogging about, but you would have to ignore the obvious.
A “new” institution like the NIA is nothing but a bunch of humans who will end up running it. The integrity and motivation of these humans will only last until one of them bumps into a scam and is forced to look the other way. There will be a few individuals who are able to ignore obvious scams and continue to be highly motivated. These specimens do exist and they are the ones who keep this ship afloat.
Remember, every scam deposits a bunch of negative energy into the system. There are stake holders in it who may even be the very forces that run these institutions. As scams go, what really matters is the simplicity of the scam and not its size. This is why I prefer complex scams to simple ones. It is dead easy to bump into simple scam and really difficult to ignore it.
Today, there is a trend in favour of simple scams that are easy to understand. Contrast with past scandals like Bofors or Harshad Mehta or Sukh Ram. The alleged spectrum scam takes it to a new level. Stripped of inter deparment politics, it is a simple case of selling government assets for its market price through a middleman instead of directly. If there are political formations who have benefited, they will have a huge advantage at the polls. Why ? Their cash generation and subsequent immunity has been proven yet again. Vote marshals are attracted to such political formations. The end result is that the educated middle class vote the bloggers talk about is devalued by that much. Therefore, demanding accountability is placed out of reach by that much.
We will continue to follow this story. Of course stupid, we are aware it will die soon. The PM and former FM continue to maintain a silence waiting for this outcome. Which they will be rewarded with in due time.
News links :
The Speaker (who refused to resign his post even after expulsion from his party) has refused a JPC probe on the scam. The left parties checkmated by their own former leader !
The Telenor-Unitech deal is running into rough weather. It turns out that the parent company of Unitech Wireless had huge debts.
Interesting parts reproduced here :
DR. V. MAITREYAN: According to the current estimates, the country has suffered a loss of nearly Rs.1,00,000 crore in this one deal. (Interruptions) To put it in perspective, the six crore population of TamilNadu can be provided rice, now priced at one rupee a kg, free of cost,through ration shops for the next 140 years with this money.(Interruptions)
– – – –
MR. DEPUTY CHAIRMAN: Thirty-six seconds. (Interruptions)
DR. V. MAITREYAN: No, Sir (Interruptions) Nothing has happened.(Interruptions) I will keep on saying. (Interruptions) From the time the rate was fixed in 2001, till the allocation was made in 2008, spectrum appears to be the only item that has not registered an increase in price for seven full years. Two companies, namely, Swan and Unitech have no experience whatsoever in telecommunication. (Interruptions) A host of other companies are involved and interlinked with these two companies. They are: Swan, Tiger, Parrot and Zebra — all zoological specimens. Nobody knows who are the people behind these mysterious companies.
MR. DEPUTY CHAIRMAN: Your time is over. (Interruptions)
DR. V. MAITREYAN: Unitech is a real estate company, which got the bumper deal without investing anything in telecom infrastructure.
MR. DEPUTY CHAIRMAN: You please go. You are disturbing your own Member. (Interruptions) Nothing goes on record.
DR. V. MAITREYAN: What is this, Sir? (Interruptions)
MR. DEPUTY CHAIRMAN: No. (Interruptions) It is Zero Hour.It is Zero Hour. (Interruptions) Mr.(Interruptions) No. (Interruptions)Maitreyan. (Interruptions) Please go. (Interruptions) Please go.
DR. V. MAITREYAN: Sir, I want to know whether the mike is switched off or not.
MR. DEPUTY CHAIRMAN: You see, you have taken three minutes. (Interruptions)
DR. V. MAITREYAN: No, I will not. (Interruptions) What is this? (Interruptions) They are disturbing me. (Interruptions)
MR. DEPUTY CHAIRMAN: I have allowed you. In another half a minute you complete it.
DR. V. MAITREYAN: One minute, Sir.
MR. DEPUTY CHAIRMAN: Okay. You complete it. Complete it. If you disturb it, I will not allow that. (Interruptions) No. (Interruptions) You cannot do that.
DR. V. MAITREYAN: It got licence to operate in 22 circles for Rs.1,651 crore within weeks, it sold 60 per cent shares for Rs.6,120 crore to the Norwegian company, Telenor, which is currently a major telecom player in Pakistan and Bangladesh. The Home Ministry has not cleared the Telenor’s deal, as it is operating in Pakistan and Bangladesh. The Swan Telecom bagged the licence for Rs.1,537 crore for operating in 13 circles. Within weeks, it sold 45 per cent of its shares to Etisalat, the telecom giant in the UAE, for 900 million US dollar. (Interruptions)
MR. DEPUTY CHAIRMAN: Your one minute is over. (Interruptions) One minute is over. Shri Tapan Kumar Sen. (Interruptions) Nothing else will go on record. It is over.
SHRI TAPAN KUMAR SEN (WEST BENGAL): Sir, I stand here to..
DR. V. MAITREYAN: *
MR. DEPUTY CHAIRMAN: That is not going on record. (Interruptions) It is not going on record. (Interruptions) It is not going on record. (Interruptions) Nothing is going on record. (Interruptions) Nothing is going on record. (Interruptions) I have called Mr. Tapan Kumar Sen. (Interruptions)
Read the full transcript here (a PDF document)
Request to bloggers (Mutiny, National Interest, etc)
Please write at least one post about this ! It is in the “National Interest” to protect the scarcest of national resources. Is it not ?
The title is not mine.
Facts that have recently come to light indicate that the telecom spectrum scam is the biggest financial scandal in the history of Independent India, involving an amount not less than Rs 50,000 crore and possibly as high as Rs 1,00,000 crore — as much as one-fortieth of the country’s national income. This sum is certainly more than the total amount spent by the Central government in a year on health-care and roughly three-fourths of the fiscal deficit indicated in the Union budget for the current financial year.
Source : ExpressBuzz
Actually, we do not know about all the scams that took place before our Independence. What were the scams in Akbars’ court, or in Lord Curzon’s time ?
We talked about Swan and Unitech who become overnight dollar billionaire by reselling. Now, we also know of Tata Teleservices who sold 26% to NTT DoCoMo of Japan for 13,000 crore.
This was one of the big mistakes committed by the scamsters. If they had avoided pure “entrepreneurs” like Swan and Unitech and gone with established “entrepreneurs” like Reliance, Bharti, or Tata, it would have been much much harder to arrive at the market value. They have established operations, customers, and employees. The valuations are would have to factor in all of these assets. The media is also less likely to pursue a story against Ambani and Ratan Tata.
The article goes on to describe the chaos at Sanchar Bhavan,
On January 10, at 2.45 pm, the DoT posted an announcement on its website saying letters of intent would be issued between 3.30 pm and 4.30 pm and that application fees (worth over a thousand crore rupees in many cases) would have to be paid immediately by demand draft with supporting documentation. Licences with spectrum were given to those who deposited their fees first by even a fraction of a second. In the mad melee, well-heeled CEOs were manhandled by hired bouncers and DoT staffers were bashed up before the cops turned up, late as usual.
The article has a predictable conclusion:
By the time these reports come out and court judgments are delivered, the next general elections would either be imminent or over. Therefore, the question that remains is whether or not Raja will be held accountable for his actions while he remains a minister in the Union government. Your guess would be as good as mine.
Source : Express Buzz
This is where we drop the ball.
See, in India we do not conduct elections separately for the Telecom Ministry, Home Minstry, or Health Ministry. They are all part of the Congress led UPA coalition. It is another matter if this happened on the sly without the knowledge of the Congress party. That is not the case. It happened with the full endorsement of the PM and FM.
The minister has claimed he followed existing rules while allotting spectrum, and that his decisions have been endorsed by the Prime Minister and finance minister.
There is a deafening silence from both the PM and former FM on this.
The only solution is to scrap all licenses and re-auction them.
Now, cancellation of licenses may lead to a “Get Shorty” scenario. So be it. Indian entrepreneurs are used to it. They are big boys.
First, an update on the grand daddy of all scams. The Congress Party led UPA government’s underselling of a national property by Rs 55,000 Cr is starting to attract eyeballs. Some “entrepreneurs” have become dollar billionaires in just a 6-9 months.
In the Rajya Sabha today, V Maithreyan of the AIADMK raised the issue of the scam. He was supported by CPM and BJP. Some correctly described the scam using the following phrases. “The greatest ever scam” (Maithreyan), “dubious companies which had nothing to do with telecom” (Tapan Kumar Sen), “scam has broken all records (Prakash Javedekar), “Very serious issue” (Sharad Yadav).
Nothing is going to expose Indias underbelly like this scam.
The media must strain every muscle to shield some people in the Congress. The Telecom minister has clearly said that both Prime Minister Dr Manmohan Singh and former Finance Minister and current Home Minister Mr P. Chidambaram were in the loop on all details. We have not heard a single word from these two gentlemen. As things stand – they are in on this !
Now back to the main post – about another “entrepreneur”
Today, another White Tiger proved yet again why Indians are the ultimate entrepreneurs.
India’s fourth largest IT bellwether Satyam Computer Services late Tuesday drew a barrage of criticism after it announced a decision to spend $1.6 billion (Rs.79.2 billion) to buy real estate and infrastructure firms run by the two sons of its founder-chairman B Ramalinga Raju.
Earlier, in a notification to the stock exchanges, Satyam said it would spend $1.3 billion (Rs.64.35 billion) to buy a 100 percent stake in real estate firm Maytas Properties and $300 million (Rs.14.85 billion) for a 51 percent stake in Maytas Infra.
The Hyderabad-based Maytas Properties is run by Rama Raju, the younger son of the Satyam founder, and Maytas Infrastructure by Teja Raju, the elder son.
Source : Expressbuzz
I am 80% certain that Satyam (NYSE: SAY) does not require shareholder approval to buy the two Maytas companies. We dont work like that here.
A side note (consider the following quote) :
“The buyout will de-risk the core business by bootstrapping a new business vertical in infrastructure. This market segment can mitigate the risks attributed to developed markets and traditional verticals that are likely to be impacted by the recessionary economy,” Ramalinga Raju said in a statement later.
Dear God ! Is this how IT high tech honchos talk ?
A clean-room-capitalist defence
Maytas companies are said to have a land bank of 6800 acres (thats right). Their fathers’ firm Satyam has cash balances amounting to USD 1.2 Billion. Both Satyam and the two Maytas companies are private companies. If one wants to buy the other, then why is Realitycheck’s heart burning ? Is RC a closet socialist ? If this is a bad move, both Satyam and Maytas will crash and burn. Either way it is the prerogative of the two private parties. There is no scam here – move on.
What is wrong with the above ? Any guesses ?
Answer in the comments section.
Trivia : Maytas is Satyam spelled backwards.