India's top court declines review of 2G licenses cancellation

India's Supreme Court had ordered in February that 122 mobile licenses should be cancelled

India's Supreme Court has declined to review its earlier order to cancel 122 mobile licenses in 22 service areas, that will affect the Indian joint ventures of Telenor, Emirates Telecommunications, NTT DoCoMo and Sistema.

The court ordered in February that the licenses granted in 2008 should be canceled in four months as there were irregularities in the allotment of these licenses which were sold at basement prices.

The foreign companies which invested in Indian companies that bagged the licenses paid in contrast whopping sums for their stakes, the Supreme Court said.

The affected companies like Telenor and Sistema are also exploring other options including invoking bilateral treaties between governments.

Sistema's joint venture said after the order on Wednesday that it had filed the review petition to protect the interests of more than 16 million customers and investments of over US$3.1 billion. It said it was currently deliberating its future course of legal action.

"We have carefully perused the review petitions and the record of the case and are satisfied that the impugned judgment does not suffer from any legal infirmity warranting reconsideration of the issues decided therein," the Supreme Court said in one of the orders while rejecting the review petitions from seven telecommunications companies this week.

The Supreme Court will however consider a petition from the government which among other things seeks clarifications on the powers of the executive to decide to allot licenses without an auction, a practice it already follows in some other industries like mining.

The court ordered in February that the Telecom Regulatory Authority of India should auction the licenses, and some of the companies that were deprived of their licenses by the order are expected to bid in the auction.

Sistema's Indian joint venture last month passed a resolution to double its authorized capital to about $2 billion, leading to speculation that it may bid for licenses in the auction. The joint venture stands to lose 21 of its 22 licenses in the country as a result of the cancellation ordered by the court. There will not be a change in the voting equity structure of the joint venture as a result of the increase in its share capital, Sistema said.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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John Ribeiro

IDG News Service
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