2G: PM seeks Attorney General's opinion on SC verdict

Days after the Supreme Court cancelled 122 licences for 2G spectrum, Prime Minister Manmohan Singh on Saturday held consultations with senior Cabinet colleagues on its impact on overall telecom sector and the way forward.

The meeting was attended by finance minister Pranab Mukherjee, home minister P Chidambaram, telecom minister Kapil Sibal and law minister Salman Khurshid. Attorney General GE Vahanvati and telecom secretary R Chandrashekhar were also present.

The Prime Minister has sought Vahanvati's opinion on the Supreme Court verdict.

"This meeting was to inform senior ministers as to what are the implications and ramifications of the judgement. This group was not meant to take any decision," Sibal told reporters later.

Chandrashekhar apprised the meeting about the finer points of the judgement and its impact on the telecom sector, amidst fears that the FDI flow could be affected.

The telecom secretary gave a "full presentation on what the judgement is about, what it means and when we move forward", Sibal said.

"Ultimately all the matters have to go to cabinet so government has to be informed before that in order to take a decision," telecom minister said.

The meeting is also understood to have deliberated upon the auction which is to be carried out for nearly 546 mhz of 2G spectrum vacated by nine telecom operators whose 122 licences across the country.

In this context, the Telecom Regulatory Authority of India (TRAI) has floated a pre-consultation paper seeking comments from stake-holders on guidelines for spectrum auction as directed by the Supreme Court.

The situation has become difficult with some foreign operators like Norwegian Telenor and Russian Sistema, whose licences have been cancelled, are putting pressure on the government, asking it to safeguard their investments.

Telenor, a majority shareholder in Uninor, claims to have invested over Rs 14,000 crore in Indian operations while Sistema, a majority joint venture partner in Shyam-Sistema, has pumped in over USD 2.5 billion (about Rs 12,000 crore).

Both are likely to particiapte in the forthcoming auction of 2G spectrum to continue their operations and secure investments.

Last week, the Supreme Court had cancelled 122 2G licences granted during the tenure of former telecom minister A Raja declaring it as "illegal" and blamed the government's flawed first-come-first served policy.

According to sources, the telecom ministry is likely to send, within a week, letters to new operators for termination of their licences.

This was discussed in the Department of Telecom's internal meeting to discuss the implications of the Supreme Court order and way forward in this regard.

The members discussed various issues including sending communication to licencees for termination of licence agreement, refund of licence fee in respect of 85 licences who were declared ineligible, and similarly for remaining 37 licences, a source close to the development said.

Also watch the accompanying CNBC-TV18's video for more analysis.