What 2G scam, asks Sistema. We were the only guys in 'Q'

Norwegian major Telenor may be claiming billions in damages from the Indian government over the cancellation of its 2G licences, but Russian player Sistema, the majority owner of Sistema Shyam Teleservices Ltd (SSTL), has adopted a more prudent approach.

Till date, SSTL has not sought any damages or compensation from the government. It is relying solely on a review petition filed in the Supreme Court which says that it was the only pure CDMA (code division multiple access) player whose licences were cancelled. CDMA uses spectrum more efficiently, and most of the demand for spectrum was from GSM players during the 2G scam.

[caption id=“attachment_258079” align=“alignleft” width=“380” caption=“Till date, SSTL has not sought any damages or compensation from the government. It was the only company to apply for pan-India CDMA spectrum in 2008. Reuters”] [/caption]

Sistema’s argument is that it did not benefit from Andimuthu Raja’s version of the first-come-first-served (FCFS) policy on the allocation of spectrum as it was a CDMA player.

“No one was in the queue (to get a licence) in the 800 Mhz band spectrum before or after us. So how have we benefited from the FCFS policy? Also, in its report, the Comptroller and Auditor General (CAG) has not once mentioned that the grant of licences for the 800 Mhz band caused any loss to the exchequer. We are hopeful that these counter arguments will help us get relief,” sources told Firstpost.

Sistema claims to have invested over $3.1 billion in India and has over 16 million customers. It was the only company to apply for pan-India CDMA spectrum in 2008.

A story in Business Line on Wednesday hinted that the government may be working out some relief for SSTL. It said one option could be to restrict the auction for CDMA spectrum to only new players, which would give the Russian major a fair chance to buy back spectrum at a low cost.

In its comments before the regulator, the Telecom Regulatory Authority of India (Trai), SSTL has already proposed that a two-step process be followed for spectrum auctions whereby older players who already held spectrum before Raja’s auctions were kept out of the initial auction process.

SSTL has also pointed out that Trai should not be seen as favouring a few operators who have “already got more than the contracted spectrum and that too in the absence of any policy framework permitting such allocation . Government has been following the policy of ‘No cap’ and reiterated the same even in the Draft Telecom Policy 2011. Therefore, a few operators should not be allowed to garner huge spectrum, thus vitiating the level playing field and stifling fair and equitable competition…..”

The Indian government’s hints on helping out SSTL come just when the Russian Minister of Economic Development, Elvira Nabiullina, is in New Delhi and has already raised Sistema’s case during a meeting on Tuesday with Commerce Minister Anand Sharma.

Meanwhile, sources contended that while Telenor has been voluble in demanding justice over its licence cancellation, India has more to lose if the Russian government were to insist on invoking the bilateral agreement since trade of $5 billion happens between the two countries.

Sistema recently invoked the provisions of the India-Russia Agreement for Promotion and Mutual Protection of Investments in this dispute. It said that if the dispute is not settled amicably by 28 August, it reserves the right to start proceedings against India before an international arbitration tribunal set up in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law and/or in any other available forum.

SSTL was among those companies hit by the landmark Supreme Court order in February cancelling 122 spectrum licences granted during Raja’s tenure. SSTL stands to lose 21 of its 22 licences due to this judgment.