Airtel-Tikona deal: Reliance Jio asks telecom dept to withhold clearance
New Delhi: Reliance Jio Infocomm Ltd has asked the telecom department to withhold approval for Bharti Airtel Ltd’s acquisition of Tikona Digital Networks Pvt. Ltd until Airtel pays fees to migrate Tikona’s wireless broadband spectrum, held under an Internet service provider (ISP) licence, to a unified licence (UL) regime that allows operators to provide all types of telecom services.
The Mukesh Ambani-controlled firm, in a 5 May letter, also requested the department to amend the merger and acquisition rules to plug loopholes in the current guidelines before evaluating the transaction for approval.
Alternatively, Reliance Jio suggested the telecom department refund Rs1,658 crore it paid for migrating to UL to ensure a level playing field.
Jio said that in case the acquisition of Tikona is permitted, the government stands to lose more than Rs217 crore in revenue.
An Airtel spokesperson said the firm “has always been and will continue to be fully compliant with all regulatory guidelines. We strongly deny these allegations, which is yet another mischievous attempt to throttle/block competition”.
An ISP licence holder can only provide data services to customers. If under any scheme, whether a merger and acquisition (M&A) or otherwise, spectrum of an ISP is proposed to be used to provide voice services by moving to a UL regime, then the difference in license fees between a UL licence and an ISP licence should be paid to the government for each of the telecom circles involved, the Jio letter said.
“Any circumvention of this principle, in whichever form, including through misuse of M&A guidelines, will lead to loss of revenue for the government exchequer and must be prevented,” Jio said in the letter.
“While this principle is well understood by DoT and all the stakeholders, it is not stated explicitly in the M&A guidelines and as a result is being misused by Airtel to delay the payment of legitimate dues to the government,” it said.
On 24 March, Airtel said it will buy Tikona Digital Networks Pvt. Ltd’s 4G business, including its broadband wireless access spectrum and 350 cellular sites in five telecom circles. The deal size is about Rs1,600 crore.
The Jio letter could open yet another can of worms in the ongoing telecom battle where Bharti Airtel and other firms are trying to protect their turf against an onslaught by Jio, which rolled out its network in September with a host of free services that its rivals said amounted to a predatory practice.
In the letter to the telecom department, Jio also alleged that Airtel has exploited this gap in guidelines in 2013 when it merged with Airtel Broadband Services Pvt. Ltd (ABSPL), which prompted DoT to ask Airtel to pay Rs436 crore.
Airtel challenged this and approached the telecom tribunal to get a stay. The telecom department raised the demand as an entry fee for migration from ISP license of ABSPL to access service of Airtel for the four circles where ABSPL held BWA spectrum with an ISP licence.
“We submit that Airtel is attempting the same strategy for the proposed Tikona acquisition as well,” the Jio letter said.