A major face-off between Reliance Jio and incumbents threatens to wreck the telecom industry body, Cellular Operators Association of India (COAI), from within.
The Mukesh Ambani-led upstart has come out all guns blazing against COAI for trying to cut Bharti Airtel and Vodafone Idea slack over a Rs92,000-crore ($13 billion) payout ordered by India’s supreme court.
In an Oct. 29 letter to telecom minister Ravi Shankar Prasad, COAI sought relief to soften the blow from the apex court’s ruling on adjusted gross revenues (AGR) of telecom operators. Telcos pay licence fees and spectrum usage charges (SUC) to the government, but had challenged paying a share of non-core revenues like scrap sales and forex income to the department of telecom. The supreme court on Oct. 24 ruled against the carriers and asked them to shell out the dues.
If the hefty fees are not waived, “investments could be curtailed, services could deteriorate, jobs could be lost, and investor confidence will most definitely be shattered,” COAI director general, Rajan S Mathews, wrote.
Reliance Jio, however, has accused the lobby group, of which it is a member, of fear-mongering.
“We take strong umbrage at COAI exploiting the legitimate payout obligations to create an alarmist propaganda for the doom of the telecom sector in the country,” Pramod Kumar Mittal of Jio wrote on Oct. 30. “By such unwarranted behaviour, COAI has just proved that they are not an industry organisation but just a mouthpiece of two service providers.”
Jio was also irked that the COAI went ahead with the letter without waiting for its views, which it had promised to share on Oct. 30.
In one of its arguments, COAI warned of an impending monopoly in the telecom sector, “compromising the ‘Digital India’ vision of the government and the ‘Make in India’ programme for digital products.”
In its rebuttal, Reliance Jio says its promoters “have made an equity investment of Rs1.75 lakh crore ($24.7 billion) in the sector, while equity investment by Airtel and Vodafone Idea has been inadequate keeping in view the network requirement.” Meanwhile, the older operators have been “shedding crocodile tears” by claiming financial stress, the firm alleged.
This fear of Jio hatching a winner-takes-all situation for itself isn’t new. Upon the launch of its telecom services in September 2016, it offered data at dirt cheap rates, forcing incumbents to slash their tariffs.
Until a few years ago, numerous operators were vying for a piece of India’s $50 billion telecom pie. But since Jio’s entry, the sector has been in shambles with all but two legacy companies being ousted. Even the survivors are bleeding, and crushed under debt.
Meanwhile, Jio’s gimmicks to win over more customers have continued. In 2018, it announced “effectively free” 4G phones and even gave free LED TVs on buying Jio’s broadband connection launched this August.
There has been no resolution to the recent dispute yet but COAI seems is tired of the mud-slinging. “This is a private matter between the members of the Association and will be addressed in due course within the ambit of the governance structure of COAI,” it told Quartz in a statement.
But will Jio simmer down?
After all, this isn’t the first time Jio has picked a bone with an influential organisation. Earlier this month, it began charging its users 6 paise/minute for outgoing calls to other networks to strong-arm the Telecom Regulatory Authority of India into reducing tariffs.