CAG indicts DoT for loopholes that allowed RJIL to acquire BWA spectrum

Reliance Jio, a subsidiary of Mukesh Ambani-led Reliance Industries, acquired Infotel Broadband Services Pvt Ltd (IBSPL) in June 2010, soon after the little-known firm won nationwide BWA spectrum for about Rs. 12,750 crores.

The CAG, in a draft report sent to DoT for comments, criticised the eligibility criteria set for bidders. The BWA spectrum sale, which took place when A Raja was telecom minister, did not provide a lock-in period for winners.

Reliance Jio refuted all charges. It said in response to an e-mail query that the TRAI had emphasised that DoT should devise the scheme by which large and small ISP operators are permitted to deploy BWA networks.

"Due to the provision of inadequate eligibility criterion for the participation in the auction of BWA spectrum and deficient due diligence on the part of DoT officials, the promoters of IBSPL...made windfall gain of Rs. 4,800 crores at the cost of public exchequer immediately after closure of BWA spectrum auction in June 2010," the CAG's draft report said.

The CAG said that while the DoT had barred promoters holding 10 percent in a telecom company from selling their stake for three years after spectrum allocation, no such curbs were prescribed for the BWA auction.

"A non-participant company exploited the loophole left by the DoT officials in the eligibility criterion for obtaining BWA spectrum by acquiring a winning company without participating in the auction within hours of closure of auction process, thereby vitiating the sanctity of the auction process," it said.