Telecom regulator Trai on Thursday cracked the whip on six telecom players, five of which are new, recommending that the 69 licences given to them be cancelled for not meeting the roll-out obligation. The crackdown comes in the wake of the 2G licence allocation scam, where cheap licences were awarded to new telecom firms in 2008, costing the exchequer a loss of `1.76 lakh crore.

Trai’s recommendations came on a day when Mr Kapil Sibal, who has been given additional charge of the telecom ministry after Mr A. Raja was forced to resign, held a meeting with senior telecom ministry officials. The Trai recommendations are learnt to have been discussed during this meeting, chaired by the minister.
The recommendations could spell trouble for the new telecom companies as the government will find it exceedingly difficult not to act on them as these have come just two days after a CAG report, which found gross irregularities in the issue of licences to new firms, was tabled in Parliament. The CAG report has led to mounting Opposition attacks on the government for gross irregularities in 2G spectrum allocation.
However, even if the telecom ministry does act on the Trai recommendations, there is a likelihood of the companies whose licences are cancelled challenging the decision in court.
Among the five new telecom companies against whom Trai has acted are Loop, Etisalat (Swan), Uninor, Sistema and Videocon, said sources. The sixth company whose licences have been recommended for cancellation by Trai in some circles is Aircel, which has been around for a considerable length of time, having started services in 1999 in southern India. India is divided into 22 telecom circles and an operator has to take a separate licence for each circle in which it wants to operate.
The companies whose licences have been recommended for cancellation for not meeting the roll-out obligation are Loop (14 licences), Sistema (10 licences), Uninor (eight licences), Etisalat (two licences) and Aircel (four licences), said sources.
According to the telecom department’s roll-out obligations, operators have to start services in 90 per cent of the service area in metros, 10 per cent in district headquarters of the states and in other service areas within 12 months of the date of award of licence.
Some 31 licences have been recommended for cancellation due to poor services. These include Etisalat (13 licences), Videocon (10 licences), Aircel (one licence), Loop (six licences) and Sistema (one licence), according to sources.
The CAG report has said that 70 per cent of the new licences were given to companies which were not eligible on the date of filling of the application. It also found that some of these companies got licences because Mr Raja had tinkered with the “first-come-first-serve policy” of his department.
Meanwhile, Sistema denied that it had not met the rollout obligation. “Amongst the new telecom operators, Sistema Shyam TeleServices Ltd (SSTL) was the first company to launch its services. The company has complied with all its rollout obligations in all the 22 telecom circles and has already secured over seven million voice subscribers and over 3,00,000 data customers,” the company said in a statement.