Wednesday, February 9, 2011

BSNL gave away valuable spectrum to 'shell companies'

NEW DELHI: State-run telecom firm BSNL bestowed favours on "shell companies" by allotting them wireless access (WiMAX) franchises; they, in turn, were more interested in selling their stake to "potential buyers" than in rolling out broadband network services. 

Communications minister Kapil Sibal has asked the telecom department to probe how Bharat Sanchar Nigam Limited (BSNL) handed out costly broadband wireless spectrum to select WiMAX franchises who did not meet eligibility criteria for technical experience. "It has been pointed out that cheap access has been provided to these shell companies to precious resources of BSNL, including costly broadband wireless access spectrum in metropolitan cities for which BSNL has already made massive upfront payments," Sibal said in his letter. 

Official sources said some of these firms had no track record — one dealt in auto parts. BSNL allowed tweaking of contract conditions post-bid to favour some franchises. Firms also "changed their technology partners after the bid". One firm dropped Cisco for Alvarion and similarly other companies also changed technology partners. 

DoT sources said the file on the controversial deals never reached the ministry. 

"I would like DoT in coordination with finance wing to scrutinize the entire exercise once again and suggest appropriate action latest by February 11, 2011," Sibal wrote to the telecom department. He noted that BSNL made "massive upfront payments" for WiMAX, a technology that allows speedy broadband services. But it provided "cheap access" to the shell companies. 

The penalty clauses for not complying with rollout obligations were weak - ranging between Rs 5 to 10 crore — while the spectrum was worth hundreds of crores. To date, none of the companies have shared any revenue with BSNL and no services have been provided. The firms were also allowed automatic renewal of contract and a one-year moratorium in payment after winning the bids.

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