SUPREME COURT VERDICT - VICTORY FOR CORPORATE GOVERNANCE
By Ruma Dubey
The timing could not have been perfect! Today, the kingpin of the 2G scam, A.Raja completes one year in custody. And today, the Supreme Court gave the much awaited verdict on the 2S scam. In a decision which will have far reaching consequences, it cancelled all the 122 2G licenses issued after 2008. Decision on Chidambaram has been postponed; it has now been sent to the Trial Court and the decision is expected on Saturday.
This was a decision which had to come. The Supreme Court had to take this decision or else the biggest scam in the history of India would have just got ignored, with no punitive measures. One could argue about the inconveniences which will now be caused but what is the relevance of a convenience when it is based on the foundation of lies and corruption? India has got the image of a country where anything is ok, “sab chalta hai.” And this decision of the Supreme Court just changed that. There was murmur that nothing will happen as all networks and infrastructures have been put in place by the telecom companies (telcos). That is what has always happened. But this historical decision just made the Supreme Court stronger. It is perfect retribution. Yes, for us, the cost of talking on the mobile phones will now shoot up and the Govt will sit on a mound of litigations and complete arithmetic nightmare, yet it had to be done.
There is worry that this has further put a blotch on India’s reputation on the global arena; the feeling is that the Govt makes a decision, gets India Inc to work and then the Supreme Court nullifies all. But that is not really so. This was a gross case of corruption and the message sent across to the world is that we do take right decisions to correct some wrongs. Yes, there will now be a sense of uncertainty while doing business in India but at least we have shown that we do have some shred of character remaining. And the fear that such decisions will drive away the foreign companies is baseless. India is too huge a market to be ignore and more so when it comes to telecom. The opportunity is simply immense and no company in the world would want to miss out an opportunity to dig its teeth into this juicy pie.
Having said all this, the immediate implication of this decision, for you and me, would be a hike in the tariffs. For us the days of making cheap and long calls might soon be over. Obviously the telcos have been badly hit. 11 companies have been severely affected. Nine licences of Idea, three of Tata Tele, 21 licenses of Videocon, 22 of Uninor, 13 of Swap and 21 of Loop have been cancelled. If you noticed, Bharti Airtel is not named and it is the clear huge winner in all this. Apart from this, the Supreme Court has asked ten telecom players to pay Rs 5 crore as penalty. The telecom firms can operate the cancelled licenses for another four months on a market rate payment. This is big trouble for SBI too has it has Rs 23,000 crore exposure to the troubled telcos.
The telecom regulator TRAI will now make fresh recommendations on the grant of licenses. The government will take decision on licenses one month post TRAI recommendation. There are big questions - what will happen to the money collected by the Govt when it auctioned the 2G license? What will DoT do with the 540 MhZ which will now get freed? Will companies bid in the new auction? Will the foreign companies sue the Govt for loss of money?
These are questions to which we will have answers. But if the Supreme Court had not taken this decision, there would have been too many questions which would have never had any answers. The bigger picture is good – when auctioned again, can one imagine the amount of money the Govt, be if UPA or BJP or any Govt which will be in place, will rake in? The valuation of these spectrums has multiplied many times over.
More importantly, this is a victory for Corporate Governance and this is victory for India and we, the citizens of India. The faith in the Supreme Court stands firmly reposed.