Conspiracy of Silence : The Officially sanctioned loot of Rs 60000 crs in the Telecom Sector !

1 Comment / Controversies, Economy, Insider Trading, Interesting News Sightings, Reflections, STOCKS, VALUATION / By

It is chiefly for Virendra Kapoor’s ‘Inside Story’ column that I read Mumbai’s revived afternoon paper ” Afternoon Despatch & Courier” 

His Column in yesterday’s edition (sorry no weblink is available) is titled ‘A conspiracy of silence’

This is a shocking gist of what he highlights of the recent Telecom Policy to sell additional spectrum, by DMK’s A Raja,the Communications Minister in the UPA Government

  • It is atleast a Rs 60000 crs scam,making even the Bofor’s scam a child’s play
  • It is an officially sanctioned loot
  • A Raja has devised a policy in such a manner that it allowed arbitrary allotment of spectrum to hand picked parties,who in turn have already begun to sell it at windfall profits
  • The way A Raja handed over licenses on a so called ‘first come,first served’ basis created grave doubts about the fairness of the whole exercise
  • A Raja even defied the PM when the latter advised him to go for open auctions
  • The PM has virtually closed his ears and eyes to this broad daylight loot as A Raja belongs to the DMK
  • A Raja runs the Ministry independent of the PM and the Cabinet and is answerable only to DMK Boss Karunanidhi
  • Any fair arrangement like an open auction would have netted the Government thousands of crores more than it actually did
  • Successful hand picked winners of the fresh licenses can sell them almost immediately as is happening
  • Unitech,India’s second largest Real Estate Company and with no prior experience in Telecom,offloaded 60% in Unitech Wireless to Telenor of Norway for Rs 6120 crs for all it’s 22 circles,valuing the business at Rs over Rs 10000 crs.It had paid just a few thousand crores for the license
  • Swan Telecom of Mumbai got an even better deal….it paid Rs 1537 crs for the license to operate telecom services in 13 circles…within weeks it sold 45% stake to Dubai based Emirates Telecommunications Corporation valuing the business at Rs 9000 crs !
  • Neither Unitech,nor Swan have begun operations and thus do not have even one subscriber !…they have gone on to make obscene profits at the cost of the Indian exchequer and have been the beneficiaries of A Raja’s largesse

Here are some of my reflections on this

  • The Indo-US Nuclear Policy signed will be an even bigger opportunity than this Telecom Policy
  • It is simply shocking that our PM has allowed this
  • There are many precedents to this sort of shorting the Indian Exchequer….A few Years ago,the Centaur Hotel near the SantaCruz Domestic Airport in Mumbai was sold for just over Rs 40 crs to an entity ,Bajaj Hospitality,who within months sold it for over Rs 120 crs to the Sahara Group…why could the Government not have sold it at a higher and more fairer price so that the Exchequer would benefit ? 
  • These are Crimes being committed against the 1.1 billion people in India,of which 236 million live below the poverty line…that’s nearly 21% of our population…one in every five ! 
  • To be fair,one has to hear A Raja’s defense too…but the way it looks,the odds are stacked against him….it clearly appears to be a premeditated gameplan
  • The Licenses should have a Five Year Lock in…..The allottees should not be allowed to sell these or any stake in ventures that are created to exploit these….if they do so before Five Years,they must remit to the Government a significant portion of the gains on a predecided  fair formula based on reasonable returns and time period elapsed before the sale
  • To borrow a line from Pat William’s prologue in his book ‘Mr Littlejohn’s Secrets To A Lifetime Of Success’….” We live in an age which has lost it’s moral underpinnings” 
    • read more