Telecom war set to explode, PMO may have to step in

Prime minister Manmohan Singh may have to step in to resolve the no-holds-barred war between telecommunications minister A Raja and some of the leading telecom operators. The latter have been asked by the Telecom Regulatory Authority of India (Trai) to pay a one-time fee for excess 2G spectrum held by them.

The Trai recommendation, which has to be ratified by the department of telecom (DoT), will deliver a multi-thousand crore blow to major players like Bharti Airtel, Vodafone, Idea Cellular and state-run companies like MTNL and BSNL. Trai says these companies have been using extra airwaves without paying extra fee but the  government itself had allowed the higher spectrum based on subscriber numbers. The report is now with Raja, who is widely expected to accept it after seeking legal opinion.

But the industry is up in arms against the minister. While some of the companies have termed the Trai order as “arbitrary and shocking”, Idea Cellular has gone a step further and said that the telecom policies smack of “crony capitalism”. It has asked the government to “seize the moment” and give the sector a “new deal.”

Relations between the telecom industry and the ministry nosedived when taped conversations between Raja and industry lobbyists were leaked, leading to heated discussions in Parliament. The leaked conversations showed Vaishnavi Communications chief Niira Radia as a prime mover and shaker in telecom deals on behalf of several companies.

The war is now out in the open, and Raja, who feels he has been targeted by sections of the industry, is reportedly happy to use the Trai report to put the industry under pressure. Sources in the telecom ministry say that Raja has been angry with these companies as he feels some of them are behind the media campaign against him.

Sources say the tussle between Raja and telecom operators is not over spectrum. Rather, he is using spectrum to turn the tables on his detractors since he has been blamed for selling 2G spectrum cheap to some new entrants in league with lobbyists. The loss is computed at tens of thousands of crores, as the companies which got the spectrum sold it to others at huge
premiums.

Some of the big players, including Sunil Bharti Mittal and Anil Ambani of Reliance Communications, have called on the prime minister in the recent past. On Thursday, Idea Cellular joined the war of words launched by Bharti and Vodafone against the Trai recommendations. Though Reliance Communications is not affected badly in this turf war and Anil Ambani is reported to have met the prime minister to discuss other issues, telecom sources say the battle is about to get bitter.

With over Rs 55,000 crore of future spectrum revenues at stake in the ongoing 3G auction, the government cannot afford a major mess-up where everything lands up in court. This is why the prime minister may have to step in to untangle the mess, probably by constituting another group of ministers to make recommendations.

The prime minister did not want Raja in the cabinet after the last general election, but DMK strongman M Karunanidhi put his foot down and Raja was in.