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India official says new telecom licences unlikely to be cancelled

23 ноября 2010

India is unlikely to cancel 2G telecom licenses awarded in 2008, a senior government official said Friday, despite a federal auditor finding that the telecommunications ministry's allocation of bandwidth caused a potential revenue loss of more than $38.9 billion.

"There is no solution by cancelling licenses," the official, who asked not to be named, told reporters.

The government may consider imposing penalties, if a revenue loss is found, but the industry is important and can't be "destroyed," he added.

India's telecom sector is the fastest growing in the world, adding more than 15 million wireless subscribers a month. It is also the second-largest market after China for wireless services, with more than 670 million users with 56 of every 100 people with mobile connections.

The official's remarks would come as a relief to the 13 companies that received 122 licenses in January 2008, under a process the Comptroller and Auditor General of India said flouted "every canon of financial propriety, rules and procedures."

Analysts and investors were worried if the report by the CAG could lead to licenses being cancelled or revoked. The report and allegations of the spectrum allocation being mishandled have already claimed the job of Andimuthu Raja as telecommunications minister last weekend.

Prime Minister Manmohan Singh and his administration are also piled under pressure following the report, leading to fears of political instability and spooking Indian stock markets. The benchmark index lost 345.20 points, or 1.7%, to end at a two-moth low of 19,585.44 Friday.

The allocation in 2008,"undertaken in an arbitrary, unfair and inequitable manner," used the same fixed rates for bandwidth as were used in 2001 despite India's economic growth in the intervening period, the CAG noted in its 76-page report Tuesday.

The flawed process is seen as a black mark for India's telecoms revolution, which many tout as one of the most-successful aspects of modernization in the past decade. The number of mobile services subscribers swelled to more than 300 million by 2008 from 4 million in 2001.

Separately, the federal finance minister, Pranab Mukherjee, described the potential revenue loss of $38.9 million as per the CAG report, as estimations in hindsight.

On Thursday--two days after the report was released--the sector, one of India's top revenue earners, was engulfed in another crisis with the telecom regulator proposing the cancellation of 62 licenses of five new telecom operators.

These licenses, proposed to be cancelled by the Telecom Regulatory Authority of India, belong to the group issued licenses in January 2008.

"TRAI is a statutory authority and we have to study the recommendations by it," Kapil Sibal, the new federal telecom minister, told reporters Friday.

India's telecom sector has already been stung in recent quarters by intense competition with some of service areas having as many as 14 players.

The new companies that got licenses in 2008 and started mobile operations in 2009 dragged call rates to all new lows--less a cent a minute--to garner subscribers, while incumbents followed to retain users.

Источник: Total Telecom

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