India mobile licence sale lost billions, auditors say

A Raja Mr Raja denies having undersold licences to mobile phone firms

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India's former telecommunications minister Andimuthu Raja undersold mobile phone licences worth billions of dollars, federal auditors say.

Their report to parliament says rules were flouted in the 2008 sale of second-generation (2G) spectrum.

Licences in the lucrative market had been sold at "unbelievably low prices" - the loss to the government could be as high as $39bn, the report said.

Mr Raja resigned over the weekend, denying any wrongdoing.

The former communications and information technology minister said he wanted "to avoid embarrassment to the government" and allow parliament - which has been in uproar - to function normally.

He is accused of issuing the licences on a "first-come, first-served" basis instead of auctioning them. An auction of 3G bandwidth in May ended up reaping $15bn, twice the sum expected.

Mr Raja was quoted by the Indian media on Tuesday as saying that the government's position on the matter had been filed in an affidavit before the Supreme Court - and that he could not comment any further as the case was sub judice.

Ineligible companies

There are about half a billion mobile phone subscribers in India, the world's fastest growing mobile market.

A mobile phone user in India

The 96-page Comptroller and Auditor General (CAG) report said that the sale of the licences was undertaken "in an arbitrary, unfair and inequitable manner" by Mr Raja's department, which it said had favoured a select group of companies.

It is accused of not only ignoring the advice of Prime Minister Manmohan Singh on the sale - but also the advice of the ministries of finance, law and justice.

The CAG said the loss to the government could reach $39bn, but stressed that any figure was speculative because it was based on the sector's future growth.

It said that Mr Raja's ministry "brushed aside" rules while handing out the licences and that some operators did not qualify to bid for the contracts.

"We have worked out a presumptive loss. There is a loss that cannot be denied," deputy CAG Rekha Gupta told a news conference after the watchdog lodged its report with parliament.

She said that 85 of the 122 licences issued in 2008 were found to have been won by ineligible companies.

Correspondents say that the row is one of India's biggest corruption scandals in the Congress-led government's six years in power.

They say that while it has damaged the ruling party's image, it is unlikely to threaten the government's survival.

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