DoT favors RJI; smells no rat in IBSPL buyout

Favoring Mukesh Ambani-led firm Reliance Jio (RJI), the Department of Telecom (DoT) has rejected the Comptroller General of India’s (CAG) claim that there was a manipulation in the buyout of IBSPL by RJI after the broadband wireless spectrum auction in 2010. In a draft report, CAG had allegedly said that “DoT failed to recognize telltale signs of rigging in the 2010 auctions in which a small company-Infotel Broadband Services Pvt Ltd (IBSPL) - won pan-India broadband spectrum by paying 5,000 times its net worth of Rs 2.5 crore.” It also said that “IBSPL, which submitted an earnest money deposit of Rs 252.50 crore and won a slot of 20 Mhz of pan-India BWA spectrum, had through the covert and overt assistance of third party/private bank bid for Rs 12,847.77 crore and then sold the company to Reliance Jio on the day of completion of the auction.” However, media reports quoting a DoT official said: “As far as the auctions are concerned, IBSPL complied with all the required documents and unlike the previous allotment of telecom permits, this time the spectrum was being sold through competitive bidding, so there were no restrictions on sale of equity.” Another official also said that there was no lock-in clause for promoter’s equity was also factored in by bidders “who finally drove the price so high”. RIL had acquired IBSPL in 2010 after purchase of spectrum and later rechristened it as Reliance Jio. “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,” RIL had said earlier.