May 17, 2017

Government to lose Rs 217 crore revenue with Airtel's Tikona acquisition: Jio

BYPankaj Mishra

The government will lose Rs 217 crore in revenue if it allows the proposed acquisition of 4G business of Tikona Digital Networks by Bharti Airtel, Reliance Jio said in a letter to the Department of Telecom (DoT).
Bharti Airtel, however, denied the allegation.
“We bring to your attention that the scheme of merger, as announced by Airtel to its shareholders and media, indicates flagrant misuse of provisions of merger and acquisition guidelines dated January 20, 2014, with an intention to cause loss of revenue to the government exchequer,” stated the Jio letter, a copy of which is available with IANS.
The letter was sent on May 15, 2017.
Reacting to this, an Airtel spokesperson said: “Bharti Airtel has always been and will continue to be fully compliant with all regulatory guidelines. We strongly deny these allegations, which is yet another mischievous attempt to throttle/block competition.”
In March this year, Airtel acquired 4G business of Tikona Digital for Rs 1,600 crore, which will help it ramp up its broadband capacity.
The letter, quoting from Unified Licence (UL) Guidelines, said an additional fee equal to the difference between the entry fee for Unified Access Service Licence (UASL) and entry fee paid for internet service provider (ISP) licence shall be payable in addition to the entry fee as applicable for new the UL to migrate from ISP with broadband wireless access (BWA) spectrum to the UL regime.
“While this principle is well understood by DoT and all the stakeholders, it is not stated explicitly in the M&A guidelines and as a result is being misused by Airtel to delay the payment of legitimate dues to the government,” the letter stated.
“We submit that Airtel already exploited this apparent gap in M&A guidelines to avoid paying entry fee earlier also, in the case of its merger with Airtel Broadband Services Private Limited (ABSPL) in 2013.
“For the ABSAL, DoT raised a charge of Rs 436.09 crore against Airtel as an entry fee for migration from ISP licence of ABSPL to access service of Airtel for the four circles where ABSPL held BWA spectrum with ISP licence,” the letter stated.
It added: “It is pertinent to note that in 2013, Reliance Jio Infocomm has paid the entry fees of UASL licence of Rs 1,658 crore for migration from its ISP licence with BWA spectrum to UL as directed by the DoT.”
Finally, the letter urged DoT to immediately intervene in the interest of level playing field for all operators.
“Alternatively, you should consider refund of Rs 1,658 crore paid by Reliance Jio, under direction from DoT, for migrating to Unified Licence in order to ensure level playing field,” the letter added.

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Pankaj Mishra is a writer of FactorDaily.