Is there a way out of the 2G mess?
15 Mar 2012
The responses to the Supreme Court decision to cancel the 2008 2G spectrum licenses (See: SC cancels all 2G licences, orders fresh spectrum auction) from the aggrieved telecom companies have been on expected lines.
Among the domestic players, Tata Tele has filed a petition with the Supreme Court to review its earlier order. The company contends that it had applied for spectrum more than a year before A Raja yet again demonstrated the unrivalled ingenuity of the political brain to devise schemes that enrich them.
Tata Tele was an existing operator and was eligible for additional spectrum, unlike the newbies who wanted to enter the sector. But, along with Idea, Tata Tele was asked to join the 'first come first served' queue along with the new entrants.
None of the domestic companies, except S-Tel, that gained licenses have announced their future plans, possibly because most of them are under investigation. But most of their foreign partners have made their moves. Bahrain company Batelco quietly sold back its stake in S-Tel to original promoter C Sivasankaran's Siva Group.
Sivasankaran possibly agreed to the request so as not to hurt his reputation, which will be crucial when he searches for buyers for his other businesses. Besides, Siva has enough money to buy Batelco's stake.
Telenor and Etisalat are suing their local partners because, obviously, the latter would not agree for an amicable settlement. If the Supreme Court finds DB Realty and Unitech guilty in other cases related to the telecom scandal, Telenor and Etisalat can argue that they were defrauded by their partners and may have a strong case to demand compensation. In any case, it won't be easy and it will be several years before they see a settlement.
Russian company Sistema believes the trade agreement between Russia and India puts it in a better position when compared to others. Ignoring any claims against its domestic partner, Sistema has decided to go after a party it believes has enough money to pay up – the Indian government. The bilateral trade agreement has a clause that guarantees compensation to an investing company, if the destination country, in this case India, decides to take over or expropriate the former's assets.
The Indian government can argue that it had no intention to expropriate and it had no influence on the Supreme Court's decision. But, if the government successfully auctions the freed up spectrum at a much higher price, Sistema can contend that the Supreme Court decision was a de facto expropriation of an asset that has appreciated in value.
