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Indian operators named in licensing scandal following minister’s arrest

Major developments in the Indian 2G licensing scandal are underway, with the country’s Central Bureau of Investigation naming two of the operators that benefitted from underpriced spectrum permits.

The revelation that Unitech Wireless and Swan were sold significantly undervalued spectrum comes hot on the heels of the arrest of former Indian telecoms minister Andimuthu Raja.

Reports from investigations into the scandal, which resulted in Raja’s resignation and an overhaul of India’s telecoms department, had not previously mentioned specific companies by name; it is likely that more will be implicated following reports that the former telecoms secretary Siddarth Behura will “disclose everything” regarding the original licensing process.

A statement issued by Unitech – a real estate company which, during the original licensing process, was Unitech Wireless’s parent company – asserts that “it is highly incorrect to allege that any favour was shown to Unitech during the licence process.”

The inference is that Indian firms were able to obtain spectrum and licences at knockdown prices, which they could then sell to foreign investors as a means of making a substantial profit.

Both of the named operators have since rebranded following investment from big international firms. Swan now operates as Etisalat DB, while Unitech Wireless has become Uninor, having received investment from Etisalat and Telenor respectively.

Despite receiving its licence in February 2008, Unitech did not attract investment from Telenor until March 2009, a point which it was keen to stress. The parent firm added that it had received none of the Norwegian firm’s investment, which has remained with the now-rebranded Uninor.

One firm that has been cleared from the scandal is Reliance Communications, which was previously thought to have held a stake of over 10% in Swan Telecom at the time of the licensing process. While this would have brought Reliance into violation of cross-ownership laws, the allegations have been disproved.

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