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Swan founder arrested in Indian 2G licensing investigation

Following on from the arrest of former telecoms minister Andimuthu Raja, the investigation into India’s 2G licensing scandal by the country’s Central Bureau of Investigation has resulted in several other arrests.

Siddartha Behura and R K Chandolia, both former colleagues of Mr Raja, have been detained, as well as Shahid Balwa, founder of the real estate developer BD Realty and, more pertinently, Swan Telecom. The operator was one of the two recently named by the investigation as beneficiaries of the 2G scandal, alleged to have profited from foreign investment after purchasing spectrum at a discounted rate.

Now trading as Etisalat DB, Swan purchased licences for 13 of India’s telecoms circles at a cost of only INR15.4 billion (US$338 million), attracting the attention of its UAE-based namesake which then acquired a 45% stake in it for INR42 billion.

DB Realty has issued a statement claiming that Balwa will deny all of the CBI’s allegations against him, and maintains that he has been falsely accused. His arrest provides a clear indication that the CBI are investigating the named spectrum beneficiaries, meaning that Uninor is likely next on the list.

Uninor’s case is similar to Swan’s; local operator Unitech Wireless sold a substantial stake to the Norwegian Telenor following its acquisition of 2G licences in 2008. The foreign firm has stated that it may have to address its operations in India if its spectrum licence is affected by the investigation, with CEO Jon Fredrik Baksaas saying: “If there are changes to that agreement then of course we may be forced to rethink.”

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