Created for the use of Career Launcher students to help them with their next part of the journey to get admission into a Bschool.

1. 2G Scam - Overview

2. What is 2G spectrum ?
• It is a term used in telecommunication sector
• It is a spectrum which support 2G technology
• High bandwidth is required for this purpose
• 2G means second-generation wireless telephone technology
• Second generation 2G cellular telecom networks were
commercially launched on the GSM standard in Finland in 1991
• 2G introduced data services for mobile, starting with SMS text
messages

3. What is 2G scam ?
• Acc. To comptroller and auditor general(CAG) – 2G licenses issued
to private telecom players at throwaway prices in 2008 2G
spectrum allocation had caused revenue loss of Rs 1.76 lakh crore
Rules and procedures flouted while issuing licenses
• What is CAG?
• CAG is a typical file-based government auditing agency
• It stresses on reporting deviations from set procedures and
policies and fails to recognize that the deviations have resulted in
speeding up economic growth

4. 2G spectrum Scam – Background (1/2)
• India is divided into 22 telecoms zones and there are a total 281 zonal licences
in the market
• According to the telecom policy of India, when a licence is allotted to an
operator some start-up spectrum is bundled along with it
• In year 2008, 122 new second generation (2G) Universal Access Service (UAS)
licenses were given to telecom companies at the price of 2001 and on first
come first serve basis
• As per the charge sheet filled by CBI several rules were violated and bribes
were paid to favour certain firms while awarding 2G spectrum licenses
• Audit report of Comptroller and Auditor General of India (CAG) says that
several licenses were issued to firms with no prior experience in the telecom
sector or were ineligible or had suppressed relevant facts
• In November 2007, PM had written a letter to telecom minister A. Raja
directing him to ensure allotment of 2G spectrum in a fair and transparent
manner and to ensure license fee was properly revised

5. 2G spectrum Scam – Background (2/2)
• Raja wrote back to the Prime Minister rejecting many of his
recommendations
• In the same month Ministry of Finance wrote a letter to Department of
Telecommunications (DOT) raising concerns over the procedure adopted by it
but DOT went ahead with its plan of giving 2G licenses & It preponed the cut-
off date to 25 September, from 1 October 2007
• Later on the same day, DoT posted an announcement on its website saying
those who apply between 3.30 and 4.30 pm on that very day would be issued
licences in accordance with the said policy
• Companies like Unitech & Swan Telecom got licenses without any prior
telecom experience
• Swan Telecom got the license even though it did not meet eligibility criteria
• Swan got license for 1,537 crore (US$338.14 million) and then it sold 45%
stake to UAE based company Etisalat for 4,200 crore
• Unitech Wireless, got license for 1,661 crore and later sold 60% stake for
6,200 crore to Norway based company Telenor

6. How Irregularities Happened in 2G
scam? (1/2)
NO PROCEDURES FOLLOWED
• Rules changed after the game had begun
• Cut-off date for applications advanced by a week
• Licenses issued on a first-come-first-served basis
• No proper auction process followed, no bids invited
• Raja ignored advice of TRAI, Law Ministry, Finance Ministry
• TRAI had recommended auctioning of spectrum at market rates

7. How Irregularities Happened in 2G
scam? (2/2)
FAVOURITISM, CORPORATES ENCASH PREMIUM
• Unitech, Swan Telecom got licenses without any prior telecom
experience
• Swan Telecom given license even though it did not meet eligibility
criteria
• Swan got license for Rs. 1537 crore, sold 45% stake to Etisalat for Rs.
4200 crore
• Unitech Wireless got license for Rs. 1661 crore, sold 60% stake for Rs.
6200 crore
• All nine companies paid DoT only Rs. 10,772 crore for 2G licences

8. Chronology of 2G spectrum scam
Barring Raja and Behura,
12 others get bail Feb 2012
Raja & many other key people Arrested
VISION
1. CAG report says the scam caused a loss of Rs
1.76 lakh crore to exchequer
2. Raja Resigns as Telecom Minister SC cancels 122 licences
Nov 2011 granted during Raja's
Nov 2010 tenure. Directs auctioning
DoT decides to issue licenses on first-come-first Feb 2011 of licences in 4 months
served basis, preponing the cut-off date to
September 25, from October 1, 2007 Jan 2008 2009
CVC directs CBI to probe allocation of
Nov 2007 2G spectrum
DoT receives 575 applications for UAS
licenses of 46 companies
PM writes to Raja directing him to ensure allotment of 2G
spectrum in a fair and transparent manner and to ensure
licence fee was properly revised &
Oct 2007
Process of allotment of 2G Spectrum for telecom along Raja writes back to PM rejecting many of his
with Universal Access Service Licences initiated by the recommendations
Department of Telecommunications
Telecom Ministry issues press note fixing deadline for
Sept 2007 application as October 1, 2007
Aug 2007
May 2007 Raja takes over as Telecom Minister

9. Who all are Involved? (1/2)
• DMK chief M Karunanidhi's daughter and MP Kanimozhi who has been
named by the CBI as a co- conspirator with A Raja
• Shahid Balwa, the promoter of Swan Telecom, who the CBI believes
had a central role in the 2G spectrum scam. He has been accused of
colluding with former Telecom Minister A Raja by allegedly
channelising kickbacks Raja got from the spectrum sale into the real
estate
• Unitech chief Sanjay Chandra and DB Realty founder Vinod Goenka
who have been chargesheeted for cheating and conspiracy
• Three senior executives of Anil Ambani controlled ADAG, Gautam
Doshi, Hari Nair and Surendra Pipara. All these are currently lodged in
Tihar Jail
• Former telecom secretary Sidharth Behura, who allegedly shut
counters to physically block other telecom companies, faces the same
charges as Raja. And so does Raja's Personal Secretary RK Chandolia

10. Who all are Involved? (2/2)
• One of the companies named by the CBI in the 2G scam - Swan
Telecom - allegedly sent Mr Raja a Rs. 214-crore kickback that was
routed through a maze of companies but rested finally with Kalaignar
TV channel in Chennai that is owned mainly by Kanimozhi and Dayalu
Ammal. Together, they have 80% stake in the company. Sharad Kumar,
the Managing Director of Kalaignar TV, owns the balance and has also
been accused of conspiring with Mr Raja
Corporates Involved:
• Unitech Wireless
• Reliance Telecom
• Swan Telecom
• Loop Telecom Pvt Ltd
• Loop Mobile India Ltd
• Essar Tele Holding
• Essar (Parent group of Essar Tele Holding

11. Zero Loss Theory (1/2)
• Since it was based on 6.2 MHz allocation
while actual allocation was 4.4 MHz
• Sale of 122 licenses plus 35 dual
technology licenses, in 2008 at 2001
prices from Rs 1,69,652 crore down to Rs
99,000 crore
• Valuation of 2G spectrum vis-à-vis 3G
• Sibal had contended as a part of his zero
loss theory that the residual Rs 56,000
crore loss was in reality only Rs 17,775
crore since according to him "2G is one- 0 – 30K – 1.76 L
third the value of 3G spectrum“
• UPA only followed NDA policies in awarding
2G licences in 2008

12. Zero Loss Theory (2/2)
• Rejection of Theory
• TRAI's analysis is based on spectrum upto 6.2 MHz and beyond, taking
no cognizance of Sibal's zero loss theory
• Financial implication of this difference of opinion between Sibal and
TRAI will be roughly Rs 12,500 crore (roughly 7 pan-India licenses x 1.8
MHz spectrum x Rs 1,769 crore per MHz)
• Claims of vendors/service providers that 3G is three times more
efficient than 2G can only be right if technological innovations that are
available for 2G networks are not adopted
• These innovations have resulted into delivery of not only similar
capacity of 2G networks as of 3G but even higher“
• Additionally, in a circle-wise analysis, the report concludes that, "2G
value at aggregate levels is about one-and-a-half times the 3G bid,
although there are inter-circle variations
• 2G spectrum is slightly more valuable in case of most A category
service areas"

13. 2G Licenses
Number Number
Telecom regions for which license Telecom regions for which license
Name of Company of license
was granted Name of Company of license
granted was granted
Adonis Projects Pvt. Ltd.
Haryana, Himachal Pradesh, Jammu & Kashmir,
6
granted
Punjab, Rajasthan, Uttar Pradesh (East) Madhya Pradesh, Kerala, Kolkata, Punjab, Uttar
Assam, Bihar, North East, Orissa, Uttar Pradesh (East),
Nahan Properties Pvt. Ltd. 6 Pradesh (East), Uttar Pradesh (West), West Bengal,
West Bengal
Aska Projects Ltd. Andhra Pradesh, Kerala, Karnataka 3 Shyam Telelink Limited Andhra Pradesh, Delhi, Haryana, Karnataka, 17
Volga Properties Pvt. Ltd. Gujarat, Madhya Pradesh, Maharashtra 3 Maharashtra, Orissa, Tamil Nadu (including Chennai),
Azure Properties Ltd. Kolkata 1 Assam, Jammu & Kashmir, North East
Hudson Properties Delhi 1
Unitech Builders & Estates
Shyani Telelink Limited Mumbai, Bihar, Gujarat, Himachal Pradesh 4
Tamil Nadu (including Chennai) 1
Pvt. Ltd. Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala,
Unitech Infrastructures Pvt. Maharashtra, Punjab, Rajasthan, Tamil Nadu
Mumbai 1 Swan Telecom Pvt. Ltd. 13
Ltd.
(including Chennai), Uttar Pradesh (East), Uttar
Bihar, Gujarat, Himachal, Pradesh, Kerala, Kolkata,
Punjab, Rajasthan, Uttar Pradesh (East), Uttar Pradesh (West), Delhi, Mumbai
Pradesh (West), West Bengal, Andhra Pradesh, Delhi, Allianz Infratech (P) Ltd. Bihar, Madhya Pradesh 2
Loop Telecom Pvt. Ltd. 21
Haryana, Karnataka, Maharashtra, Orissa, Tamil Nadu Assam, Punjab, Karnataka, Jammu and Kashmir,
(including Chennai), Assam, Jammu & Kashmir,
Madhya Pradesh, North East
Idea Cellular North East, Kolkata, West Bengal, Orissa, Tamil Nadu 9
Andhra Pradesh, Assam, Bihar, Gujarat, Haryana, (including Chennai)
Himachal Pradesh, Jammu & Kashmir, Karnataka, Spice Communications Ltd. Delhi, Andhra Pradesh, Haryana, Maharashtra 4
Kerala, Kolkata, Madhya Pradesh, Maharashtra, North
Datacom Solutions Pvt. Ltd. 21 Assam, Jammu and Kashmir, Orissa, North East,
East, Orissa, Rajasthan, Tamil Nadu (including S Tel 6
Chennai), Uttar Pradesh (East), Uttar Pradesh (West), Bihar, Himachal Pradesh
West Bengal, Delhi, Mumbai Tata Teleservices Jammu and Kashmir, Assam, North East 3

14. 2G Scam

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