DoT, GoI soft stand on Rcom AGR dues

     

    Year 2020 is a silver jubilee year for mobile phones in India. It was started in 1995 by a call between Sri Jyoti Basu, CM, WB with telecom minister Sri Sukhram. Since then this sector has not looked back and immensely contributed for the transformation of India in several sectors after 1991 liberalization. It is growing leaps and bounds and currently having more than billion users.

But the last 25 years was full of a coaster ride in mobile telephony in India.  Large numbers of companies were involved in providing mobile telecom services because the sector presents a new opportunity but haphazard planning and monitoring, too many players, small and big alike, spectrum allotment and absence of clear enforceable guidelines and lack of capacity of DOT and TRAI in managing the growth has fare share of controversy as well.

The sector was marred by lot of controversy and the most notable one was 2G scam and which become one of the reasons of poor performance of UPA II in 2014 parliamentary elections. BJP used this scam to its fullest. However, it is a different story that in BJP rule itself it fizzles out and the main accused were not punished.

However, after the 2G scam, TRAI with several supreme court directions, general public awareness  and media attention started to act in earnest to improve the telecom service in the country  and it started showing the results. The mobile rate started falling with quality improvement due to competition and several reforms in services were made. The user become the center for all such reform. The rapid transformation of telecom sector become the hallmark of growing India and contributing immensely for digital India, Aadhar, mobile number portability, low voice and data cost etc.

However, it has made the sector also too much under control due to 2G scam and slowly the smaller and inefficient companies in the sector were finding it difficult to raise capital and also  the profit of margin reduced substantially. Now it was clear that only big companies with sufficient capital and long-term play will survive in this sector. Spectrum were auctioned professionally to fetch much needed revenue for the government. Smaller companies started closing one by one by merger or acquisition or bankruptcy. The end beneficiary were the user by improved service and speed.

    Slowly the number of players in the sector started reducing from 22 to 13-14 and then 5 or 6. And currently prominent three are Airtel, Voda-Idea and Reliance Jio. BSNL and MTNL are struggling.

Fresh controversy has erupted on AGR dues on telecom companies and supreme court has passed an order to its effect. Except Reliance Jio, which has very small amount to pay, none other companies have capacity to clear the dues in one go or in a year or two. They will become bankrupt.In last 25 years mobile and internet has become integral part of life in India and also the essential one like our basic needs. This will be a major blow to telecom in India and considering this DoT requested Supreme court to convert the AGR dues for longer term payment. The final judgement is still awaited. The AGR calculation also has substantial controversy and the role of DOT in allowing this amount to be so huge. Why it has not been taken up earlier?

    The AGR dues is applicable to those companies also which are not in operation. Out of that Tatas have agreed to clear their dues. But substantial dues of close to 30,000 crores is with Sri Anil Ambani Rcom. The company is not in operation and the liquidation process is underway.

    Here one thing is very important that Reliance Jio is using the spectrum of now defunct Rcom since 2016 and also some other assets. This means Jio has been built initially on the assets of Rcom then why Jio is not coming forward to clear the Rcom dues? Is their any tacit understanding between both companies?

    Why DoT is soft on this and has not put any demand to Jio. It is natural and clear that Rcom asset added substantial business to Jio and help in getting more customers in record time. The position of Jio is that Jio and Rcom has no such agreement on sharing liability. If that was the case then why DoT has not blocked Rcom spectrum being used freely by Jio ? I am sure this argument will not hold in the court of law. Even a lay person can understand that if you are using somebody asset then at least you need to pay rent or compensate that company in other way and in case of a struggling company it becomes more pertinent and also ethical.

    But the complicity has increased so much in this case due to DOT stand that  spectrum is not tradable. It is not the question of trading of spectrum but when a demand has been sent to Rcom for AGR on the allotted spectrum and when it is being used by other company, then that company should be liable for the payment of AGR dues of Rcom. 

    Jio is attracting more than lakhs of crore investments in to its platform but they are not coming forward to clear dues of Rcom whose spectrum they are using since 2016.

    Supreme court has asked the GoI view on this matter. Ministry of corporate affairs is right in their thinking that the Rcom dues should be ideally cleared by Jio. Let us see how it goes?

    With past records it seems that Jio will somehow manage to get waiver not to deposit Rcom AGR dues. If it happens then it would be a big setback and also loss of substantial revenue for the government.

    Supreme court is quite strict in the matter of Vodafone and Airtel and I hope the bench hearing this case will look deeper with all facts and figure and equally strict in Rcom AGR dues recovery for the nation  irrespective of soft stand of DoT or other stakeholders  and eminent lawyer Sri Harish Salve defending Jio case with all his wits and arguments.