Indian Regulator Recommends Mobile Licenses Cancellation

India's Telecommunications Regulatory Authority of India (TRAI) has recommended to the government that about 62 licenses for 2G services should be cancelled, as the companies involved met their service rollout obligations only partially or not at all in some service areas, according to media reports late Thursday.

The move comes less than a week after India's Comptroller and Auditor General (CAG) said in a report that of 122 licenses issued in 2008, 85 licenses were awarded to six new licensees who had not met their service rollout obligations.

The Indian joint ventures of Telenor and Etisalat were among the six named by the CAG.

The CAG audit found that though these six new operators obtained the initial 4.4MHz spectrum in 81 service areas from April 2008 to January 2009, none of them had rolled out their services by Dec. 31, 2009. License provisions required these operators to roll out services in 90 percent of metro service areas and 10 percent in district headquarters within 12 months of the date of award of licenses, CAG said.

TRAI officials did not return calls.

The CAG report investigated an alleged scam in the allocation of 2G licenses by the Department of Telecommunications (DOT).

Irregular allocations of 2G licenses and spectrum in 2008 to some Indian operators may have cost the country up to US$39 billion, according to the CAG report, which was tabled in India's Parliament on Tuesday.

These licenses were issued at 2001 prices, and some of the licensees sold off stakes in their service companies to foreign investors at valuations far higher than the price they had paid for license and spectrum, CAG said. A. Raja, the country's communications and IT minister at the time, resigned on Sunday.

The DOT did not initiate measures to collect damages and penalty from the six operators for delay in their rollouts, CAG said. Their delay amounted to hoarding of finite national resources by these operators, it added.

The TRAI recommendation will have to be approved by the government for further action.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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