New Delhi, November 18
On the heels of the Comptroller and Auditor General’s (CAG) castigating report on 2G Spectrum allocaton, the Telecom Regulatory Authority of India (TRAI) today asked the telecom ministry to cancel nearly 70 licences of five new players, including Etisalat, Videocon and Uninor.

Shortly after TRAI made its recommendation on the network roll-out failure by these companies that were given licences and spectrum in 2008, new Telecom Minister Kapil Sibal is believed to have summoned top officials for a discussion. There were also indications that the telecom ministry could witness a shake-up and the axe could fall on some key officials who worked under former Telecom Minister A Raja.

The regulator recommended that licences be cancelled in at least 15 circles given to Etisalat, a company earlier known as Swan that CAG had dubbed as a front company of Anil Ambani group, and 10 circles given to Sistema-Shyam. Besides, it recommended that Unitech group's Uninor be deprived of licences in eight circles, Videocon in 10 circles and Loop in 19 circles.

TRAI, which had recommended penalty for non-compliance with the roll-out obligations, said that this amount could run into several thousands of crores. "So, we had suggested that these licences should be cancelled. This would vacate enormous amount of spectrum (radio waves) and this can be given to companies that are serious about meeting the schedule," the regulator said.

Meanwhile, Sistema-Shyam and Uninor said that they were in compliance with the network roll-out obligations and added that they had not got any notice from either the government or the regulator.

The licencees are required to roll-out the services in 90 per cent service area in metros and 10 per cent district headquarters in other service areas within 12 months of the date of award of licences.

TRAI's action comes amid the Comptroller and Auditor General slamming the Telecom Ministry for irregularity and impropriety in giving licences to new players in 2008, causing a loss of Rs 1.76 lakh crore to the exchequer. The action also coincides with the Supreme Court hearing into the allocation of 2G Spectrum in 2008 at 2001 prices.

While Etisalat may lose all its 15 circles, Loop Telecom and Videocon had bagged 21 circles each. Sistema-Shyam and Uninor have pan-India licences (22 circles). Besides Sistema-Shyam and Uninor, Loop Telecom, too, said that it was in compliance with the licence conditions.

Of the 62 telecom licences recommended to be cancelled, 34 are for missing out on roll-out obligations, while the other 28 are for improper roll-out.

According to the TRAI report, licences of Etisalat in two circles, eight telecom circles of Uninor, licences in 10 circles of Sistema and 14 telecom licences of Loop were recommended to be cancelled for missing roll-out deadline.

For improper roll-out, licences of Etisalat in 13 circles, Videocon in 10 circles and licences of Loop in five were recommended for cancellation.

The licence cancellation may spell more trouble for Raja, who stepped down following the castigating report by CAG. The CAG, in its report tabled in Parliament on Tuesday, also said that the Department of Telecom did not do the requisite due diligence in the examination of the applications submitted for the licences, leading to the grant of 85 out of 122 licences to the "ineligible applicants" (who did not have stipulated paid-up capital at the time of application).