Telecom Rivals Have ‘Sufficient Capacity’ To Pay Dues: Reliance Jio To Telecom Ministry
An advertisement featuring Bollywood actor Shah Rukh Khan for Reliance Jio, the mobile network of Reliance Industries Ltd., is displayed at a bus stop in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Telecom Rivals Have ‘Sufficient Capacity’ To Pay Dues: Reliance Jio To Telecom Ministry

Reliance Jio Infocomm Ltd. opposed the telecom operator lobby’s demands seeking relief for the carriers that have been asked by the Supreme Court to pay dues and penalties worth more than Rs 92,000 crore.

“We submit that the so-called affected service providers have sufficient financial capacity to pay the government dues by monetising their existing assets, investments and by issuing fresh equity in their companies,” the Mukesh Ambani-owned operator said in a letter to Telecom Minister Ravi Shankar Prasad. “We request the government to strongly rebuff such suggestions and insinuations.”

The Cellular’s Operators Association of India urged a government panel to prioritise the adjusted gross revenue issue and suggest relief measures within two months. Given the “urgency of the situation”, the lobby sought a waiver of interest and penalty, COAI Director General Rajan Mathews said in the letter to the panel. If relief is not provided, the letter said, then “investments and government revenue will suffer” due to the creation of monopolies.

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.

On Tuesday, the government set up a panel of secretaries to examine the financial stress faced by telecom service providers and suggest measures.

Reliance Jio, however, said the affected service providers have made multi-million dollars over the years through their various profitable ventures. Besides, they have benefited from withholding regulatory levies and dues for over a decade, it said. “Thus there is no constraint of making funds available to pay-off their legal obligations, the issues seems to be only with the intent, which is being manifested by COAI through its letter.”

The extraordinary scenario painted by COAI in this letter is just a machination to extract the relief from the government, when all their legal recourses have expired.
Reliance Jio’s Letter To Department of Telecommunications On Oct. 31, 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 Reliance Jio offering free data and call services for six months after its launch. Later, when Reliance Jio started charging, the COAI called its tariff plans predatory.

Reliance Jio also cited the earlier showdowns with the industry body. The letter by COAI, it said, has been submitted under “influence of two of its members in furtherance of their vested interests”.

The constraints being faced by the two telecom operators is of their own making, Reliance Jio said. The operators continued with their “below cost tariffs” without any compelling competitive pressure and hence the “government should not be obliged to bail them out for their own commercial failure and financial mismanagement”, it said.

The newest telecom operator said in the unlikely event of the two operators failing, there would not be an impact on the sector due to the “existence of vibrant competitions” and no restriction on the entry of new carriers.

Also read: Telecom Bailout Package: Reliance Jio Says Demand For Relief On Rs 92,000-Crore Dues Is ‘Alarmist Propaganda’

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