Given how this newspaper has campaigned against telecom minister A Raja's largesse to nine telecom firms in 2008, going along with Raja's attempt to bail them out seems a huge U-turn. More than a U-turn, it is being pragmatic. The companies made a fortune in that the minister gave them much-sought after licences for a song, but taking this back from them isn't going to be easy, certainly it is going to be time-consuming and litigious as well. Meanwhile, the country will remain starved of spectrum—the 3G spectrum has provided some relief to the beleaguered industry, but the quantum available is so small, it will get exhausted once there is a reasonable number of people doing serious amount of downloading/uploading of data on 3G networks. Apart from the fact that it is in the country's best interests not to have stranded spectrum as it were, there is the issue of what it will do to the industry's fortunes. The entry of so many new players ensured the competition in the industry was getting destructive—allowing mergers and acquisitions will ensure that the number of players settles to what the industry can bear.
That said, what should the solution be? Should it be, what the CAG has objected to, to simply allow firms to exit after the three-year lock-in period in their licences gets over in a few months from now—the CAG has said that no sale should be allowed until the rollout obligations are fulfilled. This, however, is easily done since, if the government acts upon the Trai's recommendation to allow virtual mobile operators (MVNOs), the firms will be in business—they won't have invested anything, but they will have "rolled out" their networks. The trick, as the CAG has said, is to ensure these firms pay a large share of the gains they make to the government, and not just in the form of capital gains tax—it should be interesting to see how many of these firms are registered in tax havens and so can escape even paying this tax. As in the case of the 3G licences, a final solution on an exit route—keeping in mind the licences are on shaky ground anyway since these firms have defaulted on their rollout obligations—should be under the aegis of an EGoM, not the telecom ministry since it was this ministry that first favoured these firms.
