CAG accuses telecom operators of forming cartels

The Comptroller and Auditor General (CAG) has blamed cartelisation by telecom companies for the failure of the recent auction of telecom spectrum and accused the government of inaction and lax implementation.

CAG in a note to the Department of Telecommunications (DoT) said cartelisation by telecom firms in the last two auctions had resulted in spectrum valued at thousands of crores being wasted.

It accused the government of wittingly or unwittingly aiding and abetting companies by not acting against them.

DG (Audit) Post and Telecommunications, a unit of CAG, said, "Apparent cartelisation by the telecom service providers observed recently in the last two spectrum auctions, wittingly or unwittingly aided and abetted by the inaction/delayed action of the licensor have already cost the government very dearly" as tranches of spectrum valued at hundreds of billions of rupees were left unsold.

The government put on sale scarce spectrum in November 2012 but limited investor interest saw the auction take in less than a quarter of the expected Rs. 40,000 crore, whilst a second round of bidding in February this year attracted just one bidder.

The government got just around Rs. 13,046 crore from the two rounds.

In the March auction, only one company Sistema Shyam Teleservices participated and the government got Rs. 3,639 crore while in November last year, just five bidders participated and netted the government Rs. 9,407 crore.

Asked about the CAG accusations, COAI Director General Rajan S Mathews said the auction methodology is such that there can be no cartelisation.

"If the CAG is saying that telecom operators are involved in cartelisation, then the auditor should provide some evidence, they just cannot make allegations," Mathews told PTI.

He added all the operators have signed the NIA (notice inviting application) that they would not involve in cartelisation.