CAG tells DoT to cancel Loop's mobile licence

Continuing to put pressure on the Department of Telecommunications, the Comptroller and Auditor General of India (CAG) has told DoT that the mobile licences issued to Loop Telecom should be cancelled, as the company did not meet the eligibility criteria at the time of application.

Some of the new players including Unitech Wireless, STel and Datacom could also be in trouble as CAG has found irregularities in their applications. The CAG has lately been on DoT's case for a number of questionable decisions in the allotment of spectrum and licences.

DoT on its part has been sheltering behind the law ministry's advice that the CAG cannot question policy decisions.

In Loop's case, CAG issued a memo to the DoT on 20 September, stating that at the time of application the memorandum of association (MoA) of the company did not include telecom business, and its authorised share capital was only Rs5.20 crore as against the requirement of Rs128 crore as per the licence condition.

''Thus, the submission of the applications for Unified Access Service Licence for 21 service areas by Loop Telecom Ltd to DoT on 3 September, 2007 with altered MoA without full disclosure of the factual position as deliberate misrepresentation of the facts and was done with the fraudulent and malafide intentions of obtaining the UAS licence from DoT, though they were not eligible to apply for the UAS licences on that date,'' stated the CAG memo.

It added that the authorised share capital of the company was increased to Rs131 crore only in October 2007 after the application was submitted, that too without informing the DoT.