Reliance Jio Says Airtel-Tikona Deal Would Result in Rs. 217-Crore Loss to Government

Reliance Jio in a letter has said that rival Airtel's acquisition of Tikona Digital's 4G business will result in a loss of Rs. 217 crore in revenue to the government. Airtel, however, denied the allegation.

In its letter to the Department of Telecom, Jio said, "We bring to your attention that the scheme of merger, as announced by Airtel to its shareholders and media, indicates flagrant misuse of provisions of merger and acquisition guidelines dated January 20, 2014 with an intention to cause loss of revenue to the government exchequer," stated the Jio letter, a copy of which is available with IANS. The letter was sent by Jio on May 15, 2017.

Reacting to this, an Airtel spokesperson said: "Bharti Airtel has always been and will continue to be fully compliant with all regulatory guidelines. We strongly deny these allegations, which is yet another mischievous attempt to throttle/block competition."

In March this year, Airtel acquired 4G business of Tikona Digital for Rs. 1,600 crores, which will help it ramp up its broadband capacity.

The Jio letter, quoting from Unified Licence (UL) Guidelines, said an additional fee equal to the difference between the entry fee for Unified Access Service Licence (UASL) and entry fee paid for Internet Service Provider (ISP) licence shall be payable in addition to the entry fee as applicable for new UL to migrate from ISP with Broadband Wireless Access (BWA) spectrum to UL regime.

"While this principle is well understood by DoT and all the stakeholders, it is not stated explicitly in the M&A guidelines and as a result is being misused by Airtel to delay the payment of legitimate dues to the government," Reliance Jio's letter stated.

"We submit that Airtel already exploited this apparent gap in M&A guidelines to avoid paying entry fee earlier also, in the case of its merger with Airtel Broadband Services Private Limited (ABSPL) in 2013.

"For the ABSAL, DoT raised a charge of Rs. 436.09 crores against Airtel as an entry fee for migration from ISP licence of ABSPL to access service of Airtel for the four circles where ABSPL held BWA spectrum with ISP licence," the letter continued.

It added: "It is pertinent to note that in 2013, Reliance Jio Infocomm has paid the entry fees of UASL licence of Rs. 1,658 crores for migration from its ISP licence with BWA spectrum to UL as directed by the DoT."

Finally, the Jio in its letter urged DoT to immediately intervene in the interest of level playing field for all operators.

"Alternatively, you should consider refund of Rs. 1,658 crores paid by Reliance Jio, under direction from DoT, for migrating to Unified Licence in order to ensure level playing field," the letter added.