India’s issue of more than 120 2G licences in 2008 has come under the spotlight, with the country’s Comptroller and Auditor General of India reported to have told the Department of Telecom that the “vast majority” of the licences are illegal, with more than 75 of the total violating “several” of the guidelines as established by the DoT during December 2005. Apparently, the Comptroller’s office believes that awards were made to companies which did not meet the basic criteria defined by the licence conditions, and that permits were issued without checking the credentials of the applicants; India Today previously identified the involvement of several real estate companies in the process as being questionable on legal grounds. Operators under investigation apparently include Unitech (now Uninor), Loop, Swan, Datacom and Allianz Infra. Indian publication Business Standard says that the DoT has asserted it had done nothing wrong during the licensing process, while also warning it would take action against any companies that had provided false information during the process.

According to The Economic Times, investigations are also underway related to: whether the process breached anti-money laundering regulations; whether the process breached foreign exchange rules (Loop Telecom and Vodafone Essar were named in this respect); whether the licence valuations were accurate, due to these being tied to a 2001 issue without taking into account an increase in spectrum value; and the role of by A Raja, India’s Telecom Minister, in the process. The latest news comes as many of India’s 2G start-ups struggle, in a competitive market where the price-per-minute of mobile calls is below US$0.01. It has been suggested that the government is looking for ways to improve the situation for these companies, including the possibility of permitting MVNOs to enter the market – although how increasing competition will help is not immediately clear. It was mooted that operators would be able to return their licences without penalty, and simply walk away from the market. Network rollout obligations may also be eased and regulatory conditions changed to encourage M&A activity. Read our analysis here.