R Jio on Thursday with a 15 point letter urges that Vodafone Idea 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 (BSNL)”, as well as absence of any restriction on entry of new operators.
The company also questioned the COAI for writing to government on financial distress & crisis in the sector. “We submit that the so-called affected service providers have sufficient financial capacity to pay the government dues by monetizing their existing assets/investments and by issuing fresh equity in their companies,” mentioned in 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 R 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 had made equity investment of Rs 1.75 trillion in the sector. Whereas, equity investments by Airtel and Vodafone Idea has been inadequate.
It said that the older service providers are themselves responsible for their current condition and 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.
The letter has also mentioned deviation from Indian Accounting standards and not following accounting policies by not taking necessary provisions and contingencies in their balance sheet when they were aware that such decision may come and accordingly appropriations were not done.
Last week, the Supreme Court upheld the government’s position on including revenue from non-telecommunication businesses like FD Interest, Asset sale, Dividend earned etc. in calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum fee to DoT.
Because of this Airtel faces a liability of around Rs. 42,000 Cr. after including licence fees and spectrum cost, Vodafone Idea may have to pay Rs. 40,000 Cr. Jio have liability of Rs 13 crore only, making it a demand of around Rs. 92,000 Cr.