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The Department of Telecom is readying show-cause notices to cancel 13 licences issued to Etisalat DB (earlier Swan Telecom) for allegedly acting as a front company to Reliance Communications.
While both Etisalat DB and Reliance Communications have denied the link-up, the DoT's licensing wing has prepared a draft notice, which is being vetted by its legal department before issuing it to the company.
Response time
DoT officials said that the company will be given 60 days to respond to the show-cause after it is issued.
The fresh notice is in addition to the show-cause sent by the DoT in December for alleged violation of rollout norms. The new notice is based on the investigations carried out by the Central Bureau of Investigation which alleged that Swan Telecom was created out of funds arranged from Reliance Telecom in a manner that the association may not be detected.
“On the date of application, Swan Telecom was acting as a front company of Reliance Telecom under a corporate veil. Its holding company, Reliance Communication Ltd, was already holding a unified access service licences for the said 13 service areas.
“This was a violation of the licence guidelines, thereby rendering the application of the company as infructuous on the date of application. Therefore, it is liable for cancellation as the applicant company used fraudulent means for getting licence,” stated the draft show-cause notice.
Crossholding norms
The note alleged that the company had violated the crossholding norms of the licence that bars a company from holding more than 10 per cent stake in two different telecom companies.
“As per the undertaking furnished by the company in its applications dated March 2, 2007, for grant of UASL licence, if any time, any information furnished for obtaining the licence is found incorrect, then its application and the licence granted on the basis of such application shall be cancelled,” the note said.
When contacted, an Etisalat DB official said that he was not aware of the show-cause and expressed surprise that the DoT was taking such a move as the issue is sub judice .
“The allegations made by the CBI has been challenged by us in the Supreme Court so it is surprising that DoT has prepared such a note before the court gives its verdict,” the official said.
Reliance Communications had earlier said that it has always been in full compliance with all applicable laws, rules and regulations, and there has been no violation of the licence conditions at any stage on account of crossholdings in excess of 10 per cent.
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