Minister resigns over 2G scam

India’s telecom minister, Andimuthu Raja, has resigned over accusations that he handed out telecom licences at reduced prices. Raja’s exit was prompted by a report by the public auditor, which found that the auction of the second generation (2G) wireless spectrum had resulted in losses of Rs1,760 billion (US$39 billion) for the treasury. Raja reportedly based the spectrum allocation on 2001 prices and unlawfully awarded licences on a first-come, first-served basis, rather than through an auction process.

This controversy has created anxieties for both service providers and their customers, who may be forced to move to new operators. Asim Abbas, a partner at Khaitan & Co told India Business Law Journal that there is “no provision in the UASL [Unified Access Service Licence] agreement on the migration of subscribers in case of termination”. While subscribers will have to migrate to other telecom operators if their current services are terminated, Abbas points out that such migration could be complicated because regulations demand that “both the ‘donor operator’ and the ‘recipient operator’ need to have a valid UASL”.

An investigation being demanded by India’s main opposition party, the Bharatiya Janata Party, may be bad news for some service providers who may have their licences revoked. The Telecom Regulatory Authority of India has asked the government to withdraw a number of the licences awarded in 2008.