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'AGR verdict no threat to sector; Airtel, Voda Idea can bear the blow': Reliance Jio tells telecom minister

Jio rebuffed COAI's concerns that the two operators might stop operations if the government does not revoke legal financial obligations arising out of Supreme Court's AGR verdict

twitter-logo BusinessToday.In   New Delhi     Last Updated: October 31, 2019  | 16:45 IST
'AGR verdict no threat to sector; Airtel, Voda Idea can bear the blow': Reliance Jio tells telecom minister
AGR verdict fallout: Reliance Jio has expressed its dissatisfaction over COAI not waiting for its views before writing to telecom minister Ravi Shankar Prasad.

In a letter to Telecom Minister Ravi Shankar Prasad, Reliance Jio has snubbed Cellular Operators Association of India (COAI)'s claim of "unprecedented crisis in the telecom industry" following the AGR verdict fallout. The telecom industry is looking at Rs 92,641-crore payout following a Supreme Court verdict on adjusted gross revenue (AGR), the impact of which was highlighted by COAI in an earlier letter to Prasad.

Writing to the minister, Jio stated that COAI did not consider its view on the matter, compelling the company to present its views separately. "We submit that we do not agree with even a single contention in COAI's letter, which has been submitted with undue haste without waiting for our view on the matter. In fact, this letter has been submitted by COAI under the influence of two of its members in furtherance of their vested interests," Jio wrote. The company is a part of COAI along with Vodafone Idea and Airtel.

Jio rebuffed COAI's concerns that the two operators might stop operations if the government does not revoke legal financial obligations arising out of Supreme Court's AGR verdict. "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," Jio said.

ALSO READ:How prepared are Airtel, Vodafone Idea to face the Rs 93,000 crore AGR shock?

ALSO READ:Govt forms panel to look into financial woes of telcos after SC's AGR blow

Jio later stated in its letter that the COAI's warnings are meant to extract relief for the two operators after all their legal recourses have expired. "They were aware of the government's position and Hon'ble Supreme Court's position as early as 2008 and 2011, however, in a most cavalier manner they continued to pay government dues as per their own interpretation... we believe that they are internally also prepared for this but are currently just forum shopping to get a relief by threatening the government, when the talks of perceived global economic slowdown and job-loss are already in the air," the company said.

In its letter to the minister, Jio further said that sector dynamics will not be affected even if the two telecom operators fail since there would be "vibrant competition including presence of PSUs" and "no restriction on entry by new operators".

"Further there will be no impact on the digitisation and government programmes, as these operators, anyway were not investing sufficiently in the sector and have been claiming a financial stress for a long time now and they have not shown any inclination to modernise the networks, as evident for TRAI data in its IUC CP," Jio said.

ALSO READ:'Airtel, Voda Idea shedding crocodile tears': Reliance Jio in letter slamming COAI

ALSO READ:About 40,000 telecom jobs at risk after SC verdict puts Rs 92,600 crore burden on sector

Jio also claimed that the incumbent operators are only to blame for their financial stress as they continued below cost tariffs despite "no competitive pressure compelling these tariffs". Notably, the Indian telecom industry has been embroiled in a tariff war for a good part of three years since Jio's entry with its disruptive data tariffs in September 2016.

The Mukesh Ambani-led telecom operator also stated that a bailout package to these telecom operators would trigger similar demand from other sectors like aviation.

The Supreme Court last week had passed an order asking telcos such as Airtel and Vodafone-Idea, and others to pay Rs 92,641 crore to the Department of Telecom (DoT). Airtel will have to shell out Rs 21,682 crore and Vodafone Idea will have to cough up Rs 28,308 crore. The amount by these two operators makes about 54 per cent of the total pending amount. This is a 16-year-old dispute in which DoT argued that a wider number of items - interest income, dividend, profits on the sale of assets, insurance claim and forex gains - should be included as components of AGR.

ALSO READ:Immediate payment of DoT dues to limit telcos' 5G bids: Fitch Ratings

INFOGRAPHIC:Can telcos survive Rs 93,000 crore AGR blow?

(Edited by Vivek Punj)

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