Airtel Vodafone Idea vs Reliance Jio

Reliance Jio has just come up with a fresh complaint against Airtel, Vodafone, and Idea. This time, India’s youngest cellular service provider claims that all three of its primary competitors have paid around Rs. 400 crores less license fee to the government. Reliance Jio has already sent a letter to the DoT (Department of Telecommunications) pleading for cancellation of the licenses held by Bharti Airtel, Vodafone India, and Idea Cellular.

According to numerous reports, the Mukesh Ambani-led company has asserted that this fraudulent payment of license fees occurred in the January to March quarter of 2017. In its complaint letter to the DoT, Jio mentioned that Airtel, Vodafone, and Idea has “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.”

Speaking of the numbers, in the January to March quarter, Bharti Airtel paid about Rs. 950 crores. Jio claims that this is around Rs. 150 crores less than the Rs. 1099.5 crores which the leading mobile operator paid as a license fee for the period October to December 2016.

As per the regulations in India, telecom companies may pay their license fee for the fourth quarter (January-March) of a year based on projected revenue. However, it must not be less than that of the third quarter (October-December) of the same financial year. For starters, the fiscal year in India runs from April to April.

Department of Telecommunications DoT

Similarly, Jio has alleged that Vodafone has paid Rs. 550 crores license fee for the fourth quarter of 2016-17. This is around Rs. 200 crores less than Rs. 746.8 crores it paid for the third quarter. Idea too has reportedly filled Rs. 60 crores lesser license fee using the same modus operandi.

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

On the other hand, COAI (Cellular Operators Association of India) has straightaway rejected the allegation. Rajan S Mathews, the Director General of the association said, “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 truth is that COAI had appealed to the Department of Telecommunications of India (DoT) to let its member pay the license fee for the fourth quarter of a financial year on the basis of estimated AGR instead of considering the real license fee for the third quarter. As a reason, the association stated the miserable financial conditions of its members which include Airtel, Vodafone, and Idea.

According to Reliance Jio, the Department of Telecommunications “did not rightfully accede” to COAI’s petition. However, it has just come to know that the telecommunication department is actually considering the request. This according to Jio is “a gross violation of license conditions and any relief will tantamount to rewarding a party in breach”. Thus, the company has challenged DoT as it should “not condone the willful, deliberate and unilateral breach of license conditions as it would affect the level- playing field to be afforded to all licensees”.