Reliance Jio Says Airtel, Vodafone, Idea Caused Rs. 400 Crore Loss for Government

Reliance Jio has filed a complaint with the telecom ministry alleging that incumbents Bharti Airtel, Vodafone and Idea did not deposit requisite licence fee in March, which led to a potential loss of Rs. 400 crores to the government.

The Mukesh Ambani-led firm alleged that Airtel, Vodafone India and Idea Cellular, in utter violation of licence rules "unilaterally, wilfully and intentionally paid the advance license fee for last quarter" of 2016-17 on the basis of estimated adjusted gross revenue (AGR), which was much lower than "the license stipulation to pay the license fee not less than the fee paid for the third quarter".

According to the complaint, Airtel paid around Rs. 950 crores as the licence fee for January-March 2017. The amount, Jio alleges, was Rs. 150 crores less than Rs. 1,099.5 crores licence fee paid by Airtel for October-December 2017.

As per rules, a telecom operator is required to pay licence fee for January-March period based on expected revenue but it should not be less than the fee paid for the third quarter of the same fiscal.

Similarly, Jio said, Vodafone paid Rs. 550 crores which was Rs. 200 crores less as compared to Rs. 746.8-crore licence fee it paid in the third quarter. Idea paid Rs. 60 crores less fee than Rs. 609.4 crores paid in the previous quarter, Reliance Jio alleged.

"The said act of the incumbent telecom service providers (TSPs) has caused potential financial loss amounting to over Rs. 400 crores to the government exchequer and in any event has caused a revenue shortfall of the said amount in financial year 2016-17," Jio alleged.

The COAI denied the allegation stating that there will be no loss to the government as AGR will be trued up to actual in the subsequent quarter.

"These allegations are both mischievous and ironic, with no basis in fact, if what we're hearing from the media is true. COAI is not in receipt of any such communication," the association's Director General, Rajan S Mathews, said.

The Cellular Operators Association of India (COAI) had requested the Department of Telecom (DoT) to allow its member companies to pay the license fee for the fourth quarter on the basis of the estimated AGR instead of on the basis of higher of estimated AGR for the period and actual license fee paid for the third quarter purportedly due to the financial conditions of the telecom operators.

Jio said the DoT "did not rightfully accede" to COAI's request but it has learnt that the department is now considering the COAI's request "which is admittedly a gross violation of license conditions and any relief will tantamount to rewarding a party in breach".

The company said that cannot allow leniency for COAI and should "not condone the wilful, deliberate and unilateral breach of license conditions as it would affect the level-playing field to be afforded to all licensees".

Demanding action against incumbent telecom operators in form of penalty up to Rs. 50 crores per service area (there are 22 service areas in India), termination of licence as per rules, among others, Reliance Jio said it has paid the advance license fee fully in compliance with the conditions and does not agree with the views expressed by the COAI.

"Any delay in taking action would set a very bad precedent, wherein licensees would unilaterally decide to breach license conditions and just inform the Licensor about it," Jio said.

Mathews said the decline in revenue was never contemplated when setting the licence conditions and hence the request was in response to an unanticipated event or foreseen in the licence.

"We have submitted our factual representation of what the industry is going through and a bare reading of that will adequately clarify that our members have categorically stated, even in their submission to DoT that they will confirm and pay the licence fee on or before April 15, 2017. With this, there is no loss to the government also as the licence fee will be paid on actual revenue," Mathews said.