We would like to throw more light on the state of affairs of the cellular telecom services in the four metro cities. We are, therefore, portions of a CAG report for the year ended March 1997 (No. 6 of 1998, chapter 3 - revenue, pages 18-27) dealing with cellular mobile services. We are also releasing an internal document of the DoT, which is not public to show how the licence fee of Rs. 6,023/- per subscriber per annum was concluded at the behest of the CAG and the doubts expressed by the DoT about future revenues to be collected. We are also releasing photocopies of published interview of Shri Sunil Mittal, CMD of Bharti Cellular openly admitting that they are in a comfortable position and was not in need of any so-called bail out package.

Now, let us elaborate on the financial and economic situation, vis-à-vis the metro cellular operators.

As a result of the new package, the new turn leading to TRAI itself going to the court has brought about a total atmosphere of uncertainty because the TRAI is fighting the government and the all critical Business Plan Parameters depend upon TRAI's recommendation and acceptance of the government. And, Sushma Swaraj has already claimed that 15% interim gross revenue figures announced by the government was not based on consultation with the TRAI since TRAI's powers were under question.

We now challenge the government to come out with the exact figure and other details about Rs. 10,000 crores which, they claim, is the exposure. Our understanding is that there is every possibility that the critical telecom sector may ultimately go into the hands of foreign operators, which needless to say, in turn will be controlled by telecom specific foreign investors. The exposure of the Indian Banks is far less as telecom world wide is a high risk-high return business. The capital investment is low and the money is dependent on talking time. These trends are already visible and the current package will only accelerate that.

Delhi: The two operators -- Bharti - British Telecom and ESSAR - Swisscom - Shiva Sankaram have both traded their stocks in huge volumes. Bharti made a huge amount by selling 38% equity to BT. In the other company, ESSAR, has already appointed Jardine Flemming to sell their equity. In the past, while selling equity to Swisscom, they had made an estimated Rs. 3,500 crores through off-shore deals and cross holdings. Former PM, Shri Deve Gowda, brought this to the notice of Shri Jagmohan, who showed concern and it finds mention in the various documents we have already released. The solution offered to stop this by the AG is a five-year lock in period. But, this is meaningless because already four years of the licence is over.

Bombay: Hutchinson-Max and BPL-US West are the two operators. It should be known to everybody that Hutchinson has already acquired 70%of equity states directly and by subsidiaries. This is how legal loopholes have been used by a foreign player. The Finance Ministry would acknowledge that the legal outflow has been Rs. 563 crores and this is by Hutchinson buying the preferential shares which is legally permissible. The world wide cellular operations of US West has been purchased by the global telecom super power AT & T. So, the Indian partner, BPL, is a minor player.

In Calcutta, Telecom Malaysia is stepping up to take over Usha Martin. J.P. Morgan has been appointed by Telstra and for doing the trading in their interest.

And, in Chennai, Shiv Sankaran has the second licence and is preparing to sell it. This is Srinivas Cellcom. The other licencee, Skycell, has also appointed A.B.N. Amro to sell off its equity.

The old regime of licence fee was a stumbling block which with the new arrangement will be removed and foreign investors and the international telecom companies will have terms which is to their liking. On the other hand, many of these cash rich foreign players will also ultimately take over some of the circles which have fall in vacant or are in the process of being vacated because the new package does not have anything in it for these sick companies. The situation will only move towards monopolisation.