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AGR verdict will not affect telecom sector; Airtel, Voda Idea can pay the money: Reliance Jio tells Centre

Reliance Jio rejected COAI's claims that Vodafone Idea and Airtel would shut shop in India if the government fails to revoke legal financial obligations arising due to the apex court's ruling on AGR. 

AGR verdict will not affect telecom sector; Airtel, Voda Idea can pay the money: Reliance Jio tells Centre

Taking a tough stand against Cellular Operators Association of India (COAI)'s claim of "unprecedented crisis in the telecom industry" following the Supreme Court verdict on adjusted gross revenue (AGR), Reliance Jio on Thursday wrote a letter to Telecom Minister Ravi Shankar Prasad saying that AGR verdict is not going to pose any threat to telecom sector.

It is to be noted that the telecom industry will have to pay Rs 92,641 crore to the Centre following the AGR verdict and COAI had said in an earlier letter to Prasad that this huge payout will have an adverse impact on the telecom sector.

Jio, however, mentioned in its letter that COAI did not get in touch with the company over its view on the matter and this has forced Jio to put forward its stand over the AGR verdict separately. "We submit that we do not agree with even a single contention in COAI's letter, which has been submitted with undue haste without waiting for our view on the matter. In fact, this letter has been submitted by COAI under the influence of two of its members in furtherance of their vested interests," Jio wrote. Importantly, Jio is also a part of COAI along with Vodafone Idea and Airtel.

Jio rejected COAI's claims that Vodafone Idea and Airtel would shut shop in India if the government fails to revoke legal financial obligations arising due to the apex court's ruling on AGR. "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," Jio said.

The Mukesh Ambani-led company stressed that COAI is batting for Vodafone Idea and Airtel and it is trying to extract relief for the two operators. "They were aware of the government's position and Hon'ble Supreme Court's position as early as 2008 and 2011, however, in a most cavalier manner they continued to pay government dues as per their own interpretation... we believe that they are internally also prepared for this but are currently just forum shopping to get a relief by threatening the government, when the talks of perceived global economic slowdown and job-loss are already in the air," the company said.

Jio also said in its letter that the telecom sector will remain unaffected even after the failure of Vodafone Idea and Airtel since there would be "vibrant competition including presence of PSUs" and "no restriction on entry by new operators".

"Further there will be no impact on the digitisation and government programmes, as these operators, anyway were not investing sufficiently in the sector and have been claiming a financial stress for a long time now and they have not shown any inclination to modernise the networks, as evident for TRAI data in its IUC CP," Jio said.

Blaming Vodafone Idea and Airtel for their financial crisis, Jio said that both operators continued to give their services at low tariffs despite "no competitive pressure compelling these tariffs". Notably, the telecom sector has been witnessing an intense tariff war since September 2016 after Jio launched its operations in the country with much cheaper data tariffs.

Jio warned the government that a bailout package to these telecom operators would send a wrong message and would compel companies from other sectors to seek similar relief from the Centre.

The trouble for Vodafone Idea and Airtel started last week after the SC passed an order asked the two companies and others to pay Rs 92,641 crore to the Department of Telecom (DoT). As per the apex court's verdict, Airtel will have to pay Rs 21,682 crore and Vodafone Idea will need to shell out Rs 28,308 crore. The dispute between DoT and telecom operations started in 2003 when DoT approached the court claiming that interest income, dividend, profits on the sale of assets, insurance claim and forex gains should also be included as components of AGR.