India continues to bully itself over 3G spectrum rip-off

The Indian finance minister has rejected a proposal to refund the Rs 29,598 crore ($6.4 billion) paid by two state-run telecom firms for 3G and broadband wireless access spectrum.

According to unnamed sources at the Business Standard, Pranab Mukherjee has rejected the request by Telecoms Minister A Raja to refund the money paid by state-owned Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) for 3G and broadband wireless access spectrum.

He said in a 10 minute conversation between the two that this was because he was concerned that legal complications may arise if the fees were returned to BSNL and MTNL, which are both controlled by the government.

The palaver follow a threat by state-owned BSNL, which is now pushing forward with strike action, following claims that it was forced to pay out Rs 18,500 crore (or US $3,934,158,625) for its 3G and broadband spectrum, earlier this month. BSNL had taken out a loan to make the payment.

It said at the time it wanted a refund from the state as it didn’t have the chance to bid and choose its spectrum circles as privately owned companies were – instead it was handed its spectrums, except Delhi and Mumbai, and told that it must match the winning bid.

The government had raised over Rs 1.06 trillion ($22.8 billion) in an auction of 3G and wireless broadband spectrum this year, about 3 times more than expected, following aggressive bidding by firms in the world’s fastest growing mobile market.

Raja is now working on an alternative proposal to help BSNL, which is planning an IPO, to recover growing losses from rolling out services in rural areas, the newspaper said.

The three day strike will go ahead on September 21 if the government doesn’t refund the 3G broadband money.