In a letter to telecom minister Ravi Shankar Prasad, Reliance Jio said that any relaxation in penalty for Airtel and Vodafone Idea will violate the Supreme Court’s recent direction to all three telecom operators to pay dues, penalties and interest worth Rs 92,640 crores within three months to the Department of Telecom. Jio has also asked the telecom ministry to reject the Cellular Operators Association of India’s (COAI) demand for financial relief to Bharti Airtel and Vodafone India, in another letter dated October 31. Bharti Airtel and Vodafone Idea declined to comment.
Jio has also marked the Cabinet Secretary, NITI Aayog CEO and secretaries in the ministries of finance, law, and telecom in its letter [November 1] and stated that the government does not have the option of going against the SC’s judgment for the telecom operators.
Jio said, “Any action on the part of the Government of India to modify or waive contractual provisions pertaining to interest and penalty on unpaid dues would be a legally tenable especially when same has been dealt in the judgment of the Hon Supreme Court specifically.”
Why did Jio write to the telecom ministry? Last week, Jio had criticised COAI for writing a letter to the government highlighting financial stress in the telecom sector without waiting to incorporate Jio’s comments in it. And now, Jio is writing directly to the telecom ministry in this regard.
What did COAI seek from the government? The COAI was seeking Telecom Ministry’s intervention in the recent SC decision which directed the Telecom Service Providers (TSP) to pay dues, penalties and interest worth Rs 92,640 Crores within 3 months. The telecom industry body had argued that such payments will cause distress to the sector as a whole.
As per Jio’s letter dated November 1, COAI is also seeking moratorium of two years and 10 years term for payment of dues, post waiver of interest, penalty. Jio further added that this demand is “persuading DoT to go against SC’s decision when the court has already settled the pay-outs and timeline for depositing the payments”.
What did Supreme Court’s rule on TSPs? On October 24, the SC had ordered that telecom companies have to include the non-core income for calculation of Adjusted Gross Revenue (AGR), and asked them to pay Rs 92,640 crores to the Centre, which includes disputed demand, interest, and penalty.
What did Jio say about other telecom operators?
In both the letters that Jio has written to the telecom ministry, it has criticised Airtel and Vodafone Idea. In the letter dated November 1, Jio said:
- These operators have sufficient financial strength: While pointing towards its incumbents [Airtel and Vodafone], Jio noted “these operators have always maintained that they have sufficient liquidity and financial strengths to overcome any adverse financial condition. They have sufficient capacity to pay government dues by monetising their existing assets/investments and by issuing fresh equity in their companies.” Jio has also urged the government to consider “other industry issues of prospective rationalisation of levies and taxes and Goods and Services Tax (GST) credit”.
In its letter dated October 31, Jio said:
- The government should not be obliged to bail them out: Jio had reiterated that the government should not be held obliged to “bail them [Airtel and Vodafone Idea] out of their own commercial failures and financial mismanagement”.
In the meanwhile, the Department of Telecommunication (DoT) has formed a Committee of Secretaries (CoS) last week to look into the demands raised by the telecom operators and to address the “financial stress” faced by the sector.