Telecom Bailout Package: Reliance Jio Says Demand For Relief On Rs 92,000-Crore Dues Is ‘Alarmist Propaganda’
COAI wants relief for telecom sector within 60 days. Reliance Jio disagrees.
India’s telecom industry is split again—this time on the Supreme Court order asking the already bruised sector to pay dues and penalties worth over Rs 92,000 crore.
Reliance Jio Infocomm Ltd. criticised industry lobby Cellular Operators Association of India’s letter urging a government panel to prioritise the adjusted gross revenue issue and suggest relief measures within two months.
“Reliance Jio completely disagrees with the intent, tone, contents and connotations of the COAI letter. The letter does not represent the industry view by any stretch of imagination,” the Mukesh Ambani-led operator said in a media statement. “We take strong umbrage at COAI exploiting the legitimate pay-out obligations to create an alarmist propganda for the doom of telecom sector in the country.”
Last week, the Supreme Court ruled that the definition of adjusted gross revenue—used to calculate spectrum charges and licence fees—will also include non-core revenue.
The verdict ended a 14-year-old legal battle but it also meant that mobile operators now stare at over Rs 92,000 crore in dues to the Department of Telecommunications. Of this, Bharti Airtel Ltd. will have to pay up Rs 21,682 crore and Vodafone Idea Ltd. will have to pay Rs 28,309 crore.
The government on Tuesday set up a panel of secretaries examine the financial stress faced by telecom service providers and suggest measures.
In its letter, COAI Director General Rajan Mathews said the panel should address the AGR issue, given the “urgency of the situation”, and sought a waiver of interest and penalty. If relief is not provided, the letter said, then “investments and government revenue will suffer” due to the creation of monopolies.
Reliance Jio said it disagreed with the “threatening and blackmailing tone” of the letter. “It would also not be out of place to mention here that despite the COAI’s and these two operators continued highlighting of the so-called financial stress, these service providers have chosen to continue with their below-cost tariffs, especially when there is not competitive pressure compelling continuation of these tariffs.”
Thus clearly, the financial difficulties of these operators are an effect of their own commercial decisions and Government should not be obliged to bail them out for their own commercial failure and financial mismanagement.Reliance Jio Statement Dated Oct. 30, 2019
This is not the first time that Reliance Jio is at cross-purposes with COAI, whose core members also include Bharti Airtel and Vodafone Idea. Earlier, the telecom lobby had vehemently opposed Jio offering free data and call services for six months after its launch. Later, when Jio started charging, the COAI called its tariff plans predatory.
Jio, too, cited the earlier showdowns. The letter by COAI “can only exacerbate the contentious relations between Reliance Jio and COAI, all due to such actions by COAI, in the past”.
The newest operator said that in the unlikely event of the two operators failing, there would not be an impact on the telecom sector due to the “existence of vibrant competitions” and no restriction on the entry of new operators.
In a separate statement today, Bharti Airtel said it hopes the government will take a balanced approach on the AGR issue to ensure the telecom sector's long-term viability. “It is indeed in the best interest of all parties to formulate a constructive mechanism to ensure large levies including this one at hand can be resolve in a fair manner,” Badal Bagri, chief financial officer of Bharti Airtel, said addressing an investor conference call.
The company had to defer releasing its full audited financial results to Nov. 14 as it is awaiting more clarity on the Supreme Court ruling and adjusted gross revenue issue.