Any relief package to telcos will go against Supreme Court verdict, says Jio
3 min read 03 Nov 2019, 05:27 PM ISTReliance Jio has alleged that Bharti Airtel and Vodafone Idea have enough funds to pay their duesLast week, SC upheld the government’s broader definition of revenue on which it calculates levies on telecom operators
PremiumNEW DELHI : Reliance Jio Infocomm Ltd has cautioned that offering any relief to rival operators after a Supreme Court judgement put a ₹92,000 crore burden on the telecom industry would go against the judgement and set a wrong precedent for other sectors. In a 1 November letter to Union telecom minister Ravi Shankar Prasad, the telecom arm of Reliance Industries Ltd also alleged that Bharti Airtel Ltd and Vodafone Idea Ltd have enough funds to pay dues.
“Any reduction in the financial liability of the licensees arising from the judgement of the Court would in effect be rewarding them for their conduct in initiating frivolous and vexatious proceedings to delay payment of their just dues," Jio said in its letter, a copy of which was seen by Mint.
“Any proposal for waiver will be considered as loss to the public exchequer and contrary to the Supreme Court judgement," Jio said.
The fresh salvo from Jio, one of the three core members of the Cellular Operators Association of India (COAI), came just a day after it wrote to the government on 31 October stating that COAI’s plea to the government seeking relief measures does not represent the view of the industry.
Last month, the top court upheld the government’s broader definition of telecom revenue, on which it calculates levies, dealing a blow to operators already burdened with losses and mounting debt. The order marked the end of a 14-year legal tussle between the department of telecommunications and telcos. Telcos will now have to pay the government ₹92,000 crore in spectrum fees, licence fees and accumulated interest. Bharti Airtel and Vodafone Idea, the only non-state firms that have survived a brutal consolidation in the sector over the past three years and posted a loss in the June quarter, have been the worst-hit by the order.
The verdict stated that dues must be paid in three months. However, COAI has urged the government to offer operators a moratorium of two years and 10-year term for payment of dues, post waiver of interest, penalty and interest on penalty.
An email query sent to COAI was unanswered till press time.
“Such largesse, if granted, will become an iniquitous precedent emboldening and encouraging others in similar situations including other sectors and spreading across industry to commit similar breaches and get away with it," Jio said in its latest letter.
It has also alleged that Bharti Airtel and Vodafone Idea have “no dearth of funds" to pay government dues.
“While the market cap of Airtel is over ₹2,50,000 crore, Bharti Infratel which is 100% owned by Airtel, is having market cap of ₹37,000 crore. The market cap of Indus Towers, as and when listed, will be three times that of Bharti Infratel. Airtel is having 33% stake in Indus Towers. If Airtel liquidates small parts of its assets or issue 15-20% new equity, it can easily arrange ₹40,000 crore to pay its obligations," Jio said.
“Similarly, market cap of Aditya Birla group, one of the Principals of Vodafone Idea, is around ₹2.3 lakh crore and of Vodafone, the other Principal of Vodafone Idea is $54.88 billion. Vodafone Idea also has stake in Indus Towers," it said.
Jio, which is currently the only profitable operator in the sector, has also said that it does not agree with even a single contention in COAI’s letter seeking relief, which was submitted under the influence of two of its members.
“The government has set up the committee of secretaries and we expect they will independently evaluate the situation and make the right decision for the country, its citizens and the industry. This situation did not arise overnight but has been the result of multiple dynamics which COAI has been highlighting over the past several years. We expect and encourage the CoS not to be distracted by motivated rhetoric from any source but do the right thing. We fully respect the honourable SC’s ruling which deals with the past, but believe an independent arm of government can make policy decisions going forward that impact the citizens, economy and industry for the betterment of all," Rajan Mathews, Director General, COAI, told Mint.
