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Only issue was whether divestment or diluting shares: PC

July 25
03:21 2011

NEW DELHI: Indian Home Minister P Chidambaram Monday said that the only issue examined by him as Finance Minister in 2007 and by the Prime Minister was if the two new telecom licensees Swan and Unitech were divesting i.e. selling their stake or diluting shares through issue of fresh equity.

He also said that the telecom ministry consistently wanted the entry fee to remain at 2001-levels but the Finance Ministry always wanted it to be rediscovered through an auction.

The Minister was speaking to PTI journalists shortly after former Indian Telecom Minister A Raja had told a Delhi court hearing the 2G case that Chidambaram, then Finance Minister, had told Prime Minister Manmohan Singh that dilution of shares by 2G licensees to attract FDI did not amount to sale.

Chidambaram declined to comment on Raja’s testimony because he would not comment on a statement reportedly made in the court.

He said that it was found that the spectrum was not sold in either of the two cases and foreign partners were inducted by way of issue of fresh shares.

“They (Swan Telecom and Unitech) were inducting foreign partners or new partners. They had got spectrum and they had (telecom) license. They were now inducting new partners.

“I think, the DoT (Department of Telecom) had approved the induction of new partners,” he said.

This was the issue that was examined by the Finance Ministry, he said.

“The question was whether it was divestment (sale) of promoter’s equity or dilution of equity by issue of fresh shares… This was examined by the Ministry of Finance.

“Both were cases of dilution of equity by issue of fresh shares. The Prime Minister wanted to know if it was a case of dilution of equity or divestment.

“I do not think there was any sale of spectrum. The spectrum was allocated to the company which got license and the spectrum remained with the company. The company issued fresh shares,” he said.

Chidambaram said that what was discussed in 2007 was “how did the new partner get inducted. The new partner got inducted by way of fresh equity.”

Asked why no telecom company till date had paid for 2G spectrum since 2001, Chidambaram said: “The companies got start-up spectrum allocated along with the licenses.”

“The DoT’s stand was that the entry fee should be the same as what was discovered in 2001. The Ministry of Finance said that the entry fee should be rediscovered through an auction.”

Consistently, the DoT was of the view that there was no change warranted in the entry fee, but MoF always said that they must auction.

-PTI

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