The Department of Telecommunications (DoT) plans to issue a show-cause notice to Etisalat DB to cancel its 13 licences for allegedly acting as a front company for Reliance Communications.
While both Etisalat DB and Reliance Communications have denied these allegations, DoT’s licensing wing has prepared a draft notice, which is currently being examined by its legal department.
It is believed that DoT will give Etisalat DB 60 days to respond to the show-cause after it is issued. Prior to this, DoT had sent the company a show cause notice in December 2010, for alleged violation of rollout norms. This notice comes after the Central Bureau of Investigation alleged that Swan Telecom was created out of funds arranged from Reliance Telecom in a manner that the association may not be detected.
The show cause notice stated, ?On the date of application, Swan Telecom was acting as a front company of Reliance Telecom. Its holding company, Reliance Communication Limited already held a unified access service licences for the said 13 service areas. This was a violation of the licence guidelines, thereby rendering the application of the company as infructuous on the date of application. Therefore, it is liable for cancellation as the applicant company used fraudulent means for getting a licence.?
The note also alleged that the company had violated the crossholding norms of the licence, that bars a company from holding more than 10 per cent stake in two different telecom companies.
The note added, ?As per the undertaking furnished by the company in its applications dated March 2, 2007, for grant of a UASL licence, if any time, any information furnished for obtaining the licence is found incorrect, then its application and the licence granted on the basis of such application shall be cancelled.?
