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Jio says Voda Idea, Airtel have enough funds to pay dues, opposes bailout

The company rapped the Cellular Operators' Association of India for writing to the government on financial distress in the sector

Megha Manchanda  |  New Delhi 

Jio, Reliance Jio
Jio said its own promoters had made equity investment of Rs 1.75 trillion in the sector

on Thursday said its older competitors, and Bharti Airtel, should get no easing of terms on the Supreme Court order to deposit past dues within the stipulated three months.

In a letter to telecom minister Ravi Shankar Prasad on Thursday, it said both have the capacity to do so and even in the unlikely event of failure, there would be no adverse impact on sector dynamics, given the "existence of vibrant competition, including presence of the public sector units", as well as absence of any restriction on entry of new operators.

The company also rapped the Cellular Operators' Association of India (COAI) for writing to the government on financial distress in the sector. "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," goes the letter.

Also, that it "strongly disagrees with the COAI submission that in the absence of immediate relief by the government, the telecom sector will collapse and there would be unprecedented crisis in the sector as two of the three private operators will be facing extreme financial crisis".

"A plain reading of the COAI letter imminently insinuates and casts unwarranted and undue aspersions against RJIL (Jio), when there's no need or a cause for it in any manner whatsoever. This makes the entire effort of COAI, a sham exercise at the behest of and perpetrating the vested interests of the two select members alone."

Jio said its own promoters (it is part of Mukesh Ambani's Reliance Industries) had made equity investment of Rs 1.75 trillion in the sector. Whereas, equity investments by Airtel and has been inadequate.

The latter failure cannot be blamed on the government.

In sum, that the older service providers were themselves responsible for their current condition and the government should not be obliged to rescue them for commercial failure and financial mismanagement. Jio also charged the other operators of "forum shopping to get relief by threatening the government", despite being internally prepared for the situation.

It suggested other industry issues, of rationalisation of levies and taxes and Goods and Services Tax credit be considered by the government but that the COAI not be allowed to mix these legitimate issues with its demand for an investment-infusing financial package.

Last week, the Supreme Court upheld the government's position on including revenue from non-telecommunication businesses in calculating the annual Adjusted Gross Revenue of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.

While faces a liability of around Rs 42,000 crore after including licence fees and spectrum usage charges, might have to pay about Rs 40,000 crore. Jio might have to pay around Rs 14 crore.

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First Published: Thu, October 31 2019. 21:13 IST
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