CAG Suggests Scrapping Reliance Jio’s Spectrum License

The Comptroller and Auditor General (CAG) has suggested cancelling the broadband spectrum allocated to Infotel Broadband Services, now a Reliance Industries company, for allegedly rigging the auction and breaching the rules.

CAG, in a report sent to the Department of Telecom (DoT), said, “The DoT failed to recognise the tell-tale sign of rigging of the auction right from beginning of the auction” in which a small Internet Service Provider - Infotel Broadband Services Pvt Ltd (IBSPL) emerged the winner of the nationwide broadband spectrum by paying 5,000 times of its net worth.

RIL, which acquired IBSPL within hours of it winning the spectrum and later renamed it Reliance Jio, said, “There is no final CAG report that we are aware of. That said, we outrightly reject any suggestion whereby spectrum was acquired in any manner other than through a transparent bidding process duly supervised by the Government of India.”

The draft report says IBSPL submitted a modest amount of Rs 252.50 crore as deposit “through the covert and overt assistance of third party/private bank”, bid for Rs 12,847.77 crore (5,000 times of its net worth) for countrywide spectrum and then sold the company on the day of completion of the auction. This “indicated IBSPL’s collusion and sharing of the confidential information with a third party in violation of the auction conditions/rules.”

An RIL spokesperson said the auction for the broadband wireless access (BWA) spectrum was a competitive one which resulted in the final bid price of more than six times the reserve price for the spectrum. “This was despite no visible evidence of any eco-system for the BWA spectrum at the time of auction. Any allegations of so-called collusion are bizarre,” the spokesperson said.