Reliance Jio asks govt to rubbish COAI claims after SC order on AGR

The bruising battle in Indian telecom sector reached high echelons of government on Thursday with Reliance Jio Infocomm Ltd (RJIL) rubbishing Cellular Operators Association of India (COAI) which has claimed an unprecedented crisis after the recent Supreme Court judgement on definition of adjusted gross revenue (AGR).

"The COAI has used threatening and blackmailing tone with the government by referring to possible job loss, quality of service (QoS) loss and loss of investments in the sector. Its contentions border on contempt of the Supreme Court judgement," said RJIL in letters to Minister of Communications Ravi Shankar Prasad, the Prime Minister's Office, the Cabinet Secretariat, NITI Aayog and ministries of finance, law and telecommunication.

Last week, the Supreme Court sided with the government's definition of adjusted gross revenue (AGR) that all revenue from telecom companies will be used for calculating the AGR. The court rejected the argument of incumbent telecom operators (mainly Vodafone Idea and Bharti Airtel) that the AGR only included license and spectrum fees.

The COAI has said the apex court's decision will negatively impact incumbent operators by over Rs 92,000 crore and is the last straw in contributing to financial distress.

RJIL disagreed strongly.

"The so-called affected service providers have sufficient financial capacity to pay the government dues by monetising their existing assets and investments and by issuing fresh equity in their companies. These service providers have stakes in many profitable ventures in the country and abroad and have made multi-million dollars of profits in the countries post investing the proceeds from telecom business, including the regulatory levies withheld for decades."

Thus there is no constraint of making funds available to pay off their legal obligations, said RJIL. COAI does not represent the industry and is just a mouthpiece of two service providers, it said referring to Vodafone-Idea and Bharti Airtel.

On the other hand, RJIL promoters alone have made an equity investment of Rs 1.75 lakh crore in the sector while equity investment by both of them has been inadequate keeping in view the network requirements. "Therefore, failure of these operators cannot be blamed on the government."

The Supreme Court's decision stemmed from a long-running dispute between incumbent service providers and the government on how to calculate the state's share of revenue which it receives as part of the fee for handing over telecom spectrum.

The companies argued that only their revenue from the use of spectrum should count. The government wanted a share of everything including, for example, revenue from rent.

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