February 2, 2012

2G Scam: SC orders 122 telecom service providers to hang up

The Supreme Court today cancelled licences given to the telecom firms involved in 2G spectrum allocation scam. A total of 122 licences had been issued since January 2008. Eighty-five out of the 122 licences were outside the eligibility criteria.

Also, the Supreme Court has dismissed a petition to probe Home MInister P Chidambaram's role in the 2G case. The matter has been referrred to the trial court which will rule on the case on Saturday. The Central Vigilance Commission (CVC) to give consolidated opinion to Apex court after CBI special investigation submits report to CVC.

Cancelled licences include 9 of Idea Cellular, 3 of Tata Tele, 9 of Swan Telecom, 21 of Loop Telecom, 21 of Videocon and 22 of Uninor. The telecom firms can operate the licences for four months at market rate payment.

Moreover, Unitech Wireless and Swan Telecom have been fined Rs 5 crore.

Within 2 months the Telecom Regulatory Authority of India (Trai) will recommend fresh guidelines on the grant of new licences. The government will make its decision after one month after submission of the recommendations.

Reliance Communications, Unitech, DB Realty and Videocon Industries have dipped more than 5% each on the Bombay Stock Exchange post the SC verdict, while Bharti Airtel and Idea Cellular have risen.

Stocks of banks with exposure to telecom dropped on BSE as SBI down 3.85%, PNB 1.95%, Axis Bank 2%.

According to PwC, the gross credit exposure of the Indian banking industry to the telecom sector stood at Rs 94,319 crore as on June, 2011. SBI has a total exposure of Rs 23,000 crore in telecom.