Spectrum Scam Raja

Why to protest the CBI raid if there is no fishy deal in the telecom ministry? Karunanidhi the octagenrian chief minister of Tamil Nadu don't lose even a minute to defend his family members. In these kinds of family rescue his health problem is not a deterrence. No idea from where he gets the energy to defend his tainted family members. A. Raja the union telecom minister for the past four years has been ruining the cash rich telecom sector. From the profit making BSNL he took the company to the begging stage. Such a non performing but a corrupt minister is ruining the potential public sector company. The Prime Minster Dr. Manmohan Singh has been dragged by Karunanidhi in his letter protesting CBI raids. Although the P.M has been compelled to utter few decent words about Raja when the UPA II was reluctant to add him as the minister the same words has been quoted as P.M's genuine certificate to the scam tainted Raja. To save the publc telecom companies from further collapse, P.M must dismiss Raja from the ministry to save the industry.

The Times of India writes (24 October 2009)

The DMK is seething with resentment over CBI's raids on the offices of Department of Telecommunications headed by partyman A Raja and the very day after, Tamil Nadu chief minister M Karunanidhi has lodged a strong protest with Prime Minister Manmohan Singh.

According to sources, the Tamil Nadu chief minister conveyed to the PM and Congress leadership that CBI's raids on the offices of Raja's ministry were inconsistent with Congress's strong defence of the commmunications minister over the 2G spectrum scam.

DMK sources in Chennai said Karunanidhi impressed upon the PM that he felt Raja was being unnecessarily humiliated, as he had consulted the PM on the spectrum allocation issue all along. The DMK stalwart also argued that the PM's decision to retain Raja in the communications ministry was clear evidence of his innocence. He also pointed out that Congress had defended the communications minister all along both in Parliament and in public, and even campaigned for him in the Lok Sabha elections.

The protest coincided with CBI expanding the investigation by raiding offices of some of the top telecom service providers and strong demands from BJP and CPM for Raja's resignation.

Sources in the CBI involved in the investigation into the 2G spectrum scam, which is said to have caused the public exchequer loss of thousands of crores, said raids were carried out in eight cities -- Mumbai, Delhi, Chennai, Mohali, Ahmedabad, Noida, Gurgaon and Jaipur.

Sources said the agency was looking into the records of all those telecom operators who had 2G spectrum licences since 2001. "The copies of all agreements and licences have been procured and these are being looked into," said an oficial.

In all, ten offices of telecom companies were raided as part of the countrywide sweep.

While the investigation has been ordered by the Central Vigilance Commission, the DMK has been defiantly dismissive of the whole affair. Raja has refused to step down, saying the decisions for which he has been accused of corruption were taken with the PM's concurrence.

Raja has been at the centre of allegations over irregularities in the allocation of spectrum right since UPA-1, but Congress had aggressively defended the minister.

The sudden raids may have led the DMK to suspect that the comfort level of Congress in its second innings in Delhi seems to have emboldened the government to seek more leeway with the coalition partner.

AICC spokesman Manish Tiwari, responding to a volley of questions on the propriety of the minister continuing in office pending probe, rejected Opposition's demand for Raja's resignation. ``Since the FIR names only officials, the question of propriety does not arise. CBI registered a case against some officials and the whole matter is still under investigation," he said.

The opposition was, however, ballistic. BJP spokesperson demanded that Raja resign forthwith. "There is no justification -- moral, political or ethical -- for Mr Raja to continue in office after the raids on the offices of his ministry. He should step down so that the agency can unearth the huge scandal without any hindrance," the BJP said.

The CPM said while the CBI probe into the allotment of spectrum licences was long overdue, it was shocking that Raja had refused to resign. "The minister cannot evade responsibility and involvement in the matter when all his explanations for adopting the first-come-first-served policy have proved baseless. In the interests of having a fair probe, it is essential that the minister not continue in office," the party said.

Well done TRAI

The Liberals thunder that the uncontrolled private sector by the government will lead to price war and at the end benefits the consumers.But that rarely happened in the world history. There needs to be a regulator to moderate the corporate greed. TRAI (Telecom Regulatory Authority of India) seems to be doing the dream act. In its continuous regulation and monitoring TRAI had done a wonderful service to the telecom users. Result of this genuine regulation can be seen in the nook and corner of India. It really realised the slogan "Roti, kapada, makan aur mobile". TRAI deserves all our support and best wishes in its journey to make the telecom sector within the reach of every India.

The Times of India writes (12 October 2009)


The stormy discussion around telecom regulator TRAI's intent to enforce a mandatory 'pay per second' mobile tariff is significant because it will affect close to 500 million telecom consumers, millions of shareholders and several bellwether stocks. TRAI wishes to mandate that every operator offer at least one per second plan. While on the face of it this appears reasonable, even pro-consumer, it does raise a few questions about over-regulating the telecom market which has so far worked pretty well.

TRAI has been exercising a policy of forbearance on tariffs for many years. What are the compulsions forcing its intervention at a time where 12 operators per circle three times higher than the global average are already engaged in the fiercest price war that the industry has ever seen? Three operators Tata Docomo, BSNL and MTS have already introduced the 'pay per second' scheme without any regulation, compelling others to follow. Is there any evidence of market failure or consumer dissatisfaction compelling TRAI to act? Does a per second offering by incumbents constitute predatory pricing for new entrants? Last but not the least, if intervention is critical why didn't TRAI act for years to proactively recommend a pay per second regime before this?

The debate needs to be balanced at many levels: consumers' immediate and long-term interest (especially if this move adversely affects new competitors) and consumer interest versus industry margins. A 'pay per second' plan does mean savings for consumers and the consumers must have the best, but should this be TRAI's priority given other pressing issues that need its immediate attention? Finally, the issue of predatory pricing is significant. It is unclear whether the per second tariffs offered by incumbents are anti-competitive, and whether that will significantly distort entry pricing for new competitors.

It is perhaps best for the regulator to hold off its guns. The TRAI Act wisely provides for a statutory consultation process before jumping to conclusions. Its pre-emptive statement ahead of economic conclusions derived from a detailed analysis of the per second regime is premature and unwarranted. Yet, if the consultation offers a sound basis for this regulation, it should be enacted without delay. TRAI's winning bet would be to give market forces a chance. Act it must, but not in haste and preferably not in vain.

Hope and Despair in Bharti Airtel- MTN Deal

A deal between two business giants create hope and despair equally. Hope because they can provide better service and extent their areas of reach. Despair because they become casual and arrogant. In most cases after mergers they become dominant mentality as there are few who can challenge their superiority in business. The two continental miracle merger of Bharti Airtel and MTN, Indian and South African telecom giants gives this cocktail of hope and despair. Given the code of ethics followed by Bharati one can have less despair and more hope in the betterment of mobile services in two continents. The sooner these two companies get rid of their national roadblocks regarding the merger the better for the telecom users.

The Times of India writes (3 October 2009)


An alliance between India's biggest mobile phone operator Bharti Airtel and South Africa's flagship telecom firm MTN would have created an entity
with $20 billion in annual revenue and 200 million wireless subscribers spanning continents. The dream was to build the world's third largest wireless operator. But more than just regulatory hurdles punctured it.
Even as people speculate about what made MTN play runaway bride at the altar, South African authorities deny playing spoiler. But the fact is that they insisted at a late stage on dual listing: companies maintaining separate sets of shareholders while joining operations and sharing profits/losses. This wasn't allowed under Indian rules.

The demand became a deal-breaker, having turned a business transaction into a subject of political hardball just before a looming deadline for ending talks. Dual listing demanded India's nod to capital account convertibility and change of company law. It was unlikely these could be hastily pushed through to facilitate one deal. An interim arrangement was thought possible, via Bharti-MTN's two-way acquisition of equity stakes, while the authorities concerned reflected on their respective positions. But the deal's nixing raises questions about the stated official backing for it, Pretoria's in particular.

Though it's not the end of the world for Bharti or MTN, there are lessons here. Commercial entities are doubtless rooted in specific nations and cultures. But we live in a world of growing economic integration. A Bharti-MTN tie-up would have scored a big goal for South-South cooperation, spectacularly signalling the rising clout of emerging markets. South Africa's insistence on MTN's "national character" was, therefore, not only off the mark but also out of sync with the spirit of the transaction. The deal's aim was to create a win-win situation for both firms through the expansion they needed to beat market saturation and to increase competitiveness. South Africa's stand is also baffling given that another national wireless carrier had earlier given controlling stakes to a British firm.

India, on its part, will need to rethink rules on taxation, company law and the exchange rate regime for easier facilitation of cross-border deals involving capital inflows and outflows. If Indian firms are to dream big, an enabling regulatory framework will have to support the kind of bold acquisitions they'll look at to spread their wings. Thanks to globalisation and the consequent unshackling of corporate vision, trade, investment and labour can't but seek to go beyond frontiers. Governments will increasingly be called upon to both keep pace and smoothen the road.