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Mr A. Raja

Thomas K. Thomas

New Delhi, Oct 30 The Minister for Communications and Information Technology, Mr A. Raja, has defended the decision to give out fresh telecom licences on a first-come first-served basis even though this has resulted in huge windfall gains to some of the Indian promoters of the new mobile companies.

Speaking to Business Line, Mr Raja said that auctioning 2G spectrum would have fetched the national exchequer less money compared to what the Government will earn through licence fees over the next few years.

He claimed that if the spectrum had been auctioned, the Government would not have been able to impose roll-out obligations, which in turn would have resulted in low rural telecom penetration.

Mr Raja said, “Critics are saying that the national exchequer has lost Rs 25,000 crore because I have given licences on a first-come first-served basis instead of auction.

“What they do not realise is that the Government will earn more money from these same operators in the form of annual revenue share (under the current regime operators pay 6-10 per cent of their revenues to Government annually).

“I would not have been able to impose the revenue share if the spectrum was auctioned. So is it better to get a one-time amount through auction or be assured of an income indefinitely, which will keep growing exponentially as the subscriber base increase?”

Mr Raja also claimed that Government had received Rs 55,055 crore in the form of various levies and charges from the existing players and, therefore, he was continuing with the same policy.

On the windfall gains raked in by the new players by selling a stake at a premium, Mr Raja said that the profit was only notional.

“If Unitech or Swan sells its share for a price to a willing buyer then that it is a business decision and it is unfair to say that the money could have come to the Government,” Mr Raja clarified.

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