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The Comptroller and Auditor General (CAG) has written to the Department of Telecommunications (DoT) stating that more than 75 licences issued by the government in 2008 are illegal.

The CAG added that these licences were awarded to operators who failed to meet several of the basic criteria laid down under the licence conditions. In fact, CAG has also listed several guideline violations by the five new entrants and their several newly-floated companies, including Unitech, Loop, Swan, Datacom and Allianz Infra.

Further, CAG has uncovered a few forgery cases as well. In many of the licences, the Memorandum of Association (MoA) of the applicant companies did not specify that they were being set up for telecom business, many of them were for construction business. So to overcome the need to have new MoAs approved by the registrar of corporate affairs, some of them put up unsigned MoAs in their applications. Many companies did not have adequate paid-up capital, and in some cases, they had violated cross-holding rules in telecom sector.