The Indian telecom industry is going through a difficult period with many mobile phone players having shut shop while the latest Supreme Court ruling has widened the definition of statutory fees to be paid by telecom companies to the government. Many industry watchers fear for the future of the sector.
However, billionaire Mukesh Ambani’s Reliance Jio, which disrupted the telecom sector in 2016, has struck a discordant note, accusing the telecom industry body Cellular Operators’ Association of India of scare mongering and of working as a “mouthpiece” of Bharti Airtel and Vodafone India.
In a strongly-worded letter to the association’s director general, Rajan Mathews, Reliance Jio attacked the industry body for threatening and blackmailing the government over a “non-existent” crisis, following the Supreme Court order. The letter was later posted by social media users.
Reliance Jio expressed displeasure that the industry body dispatched the communication to the government without waiting for its comments. It observed that the failure of two operators is an unlikely event – one that would not have any impact on competition and the Narendra Modi government’s Digital India agenda. “There is not restriction on the entry of new players,” the company observed.
The lettter also stated that the two companies, despite claiming to be facing financial stress, continue to follow the low-tariff regime.
It also accused the telecom body of “serious breach of trust” and having a “prejudiced mindset completely laced with one-sided thought process.”
“It seems there were extraneous consideration to send this letter, only on behest of other two members. By such unwarranted behavior COAI has just proved that they are not an industry organisation but just a mouthpiece of two service providers,” the Reliance Jio letter stated.
The Ambani-owned company questioned the intent, tone and contents of the telecom body’s letter, which it argued does not represent industry views.
The cellular operator’s body had in its letter to the government said that in absence of immediate relief by the central government, two of the three private mobile operators — Airtel and Vodafone Idea, which provide services to 63% of the current subscriber base — will face “unprecedented crisis.”
Attacking the industry body’s position, Jio said: “We are taking a strong umbrage at COAI exploiting the legitimate pay-out obligations to create an alarmist propaganda for the doom of the telecom sector in the country.”
“Reliance Jio said it disagrees with the “threatening and blackmailing tone” of COAI and accused the older operators of not investing sufficiently in the sector and “shedding crocodile tears” by claiming financial stress.
It accused the operators of lacking foresight and not modernizing their networks and then blaming the government for failure. Reliance Jio claimed its promoters had made an investment of 1.75 trillion rupees (US$ 24.66 billion) to modernize networks.
The company agrued that Bharti Airtel and Vodafone were themselves to blame for landing in the current mess. “Government should not be obliged to bail them out of their own commercial failure and financial mismanagement,” the letter stated.
Reliance Jio also accused the industry body of making incorrect observations and said it was tantamount to contempt of court.
“COAI’s intent of using this as an opportunity to seek non enforcement of the Supreme Court judgement and asking for relief is strongly objected by Reliance Jio…. These operators have the capacity and enough monetization possibility to comfortably pay government dues,” Reliance Jio said.
It said the industry body should represent all operators and should stop blaming the apex court ruling and instead ask members to respect the judgement and stop “shopping for relief.”
The cellular operators’ body had sought the government’s immediate intervention to avert an unprecedented crisis in telecom sector. It had also mentioned that one of its members has a different opinion on the matter and would present its comments separately.
It had warned that the impact of the crisis could affect the country’s investment climate, causing deterioration of services and job losses.
The top court had last week upheld the government’s position on including revenue from non-telecommunication businesses in calculating the annual adjusted gross revenue of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.
While Bharti Airtel faces a liability of around 420 billion rupees ($5.92 billion) after including license fees and spectrum usage charges, Vodafone-Idea may have to pay about 400 billion rupees ($5.64 billion). Reliance Jio may have to pay a much smaller sum of 140 million rupees ($1.97 million).