In a three-page letter, Reliance Jio has urged Department of Telecommunication (DoT) to not approve the acquisition of Tikona unless Airtel pays ₹217 crores.
The Mukesh Ambani-owned telecom operator says the fees has to be paid to migrate Tikona’s wireless broadband spectrum, which is under Internet Service Provider (ISP) to Unified License (UL). The conversion of the spectrum must take place as under UL operators can use airwaves for any purpose, and hence provide all kinds of telecom service.
In the letter, Jio said, if this does not happen, it should be refunded ₹1,658 crores it had paid in 2013 to migrate to UL from broadband wireless access spectrum. It further said if the deal goes through the government stands to bear a loss of over ₹217 crores. For any deal, if BWA spectrum of an ISP is to be used to offer voice services by shifting to UL regime, the difference in license fees of UL and ISP for each of the involved telecom circles has to be paid, which in this case is, ₹217 crores. In the letter, Jio has written,
Any circumvention of this principle, in whichever form, including through misuse of M&A guidelines, will lead to loss of revenue for the government exchequer and must be prevented.
In March, Airtel had announced it is taking over Tikona Digital Networks Pvt. Ltd’s 4G business. Under the deal which is worth about ₹1600 crores, it is supposed to acquire its broadband wireless access spectrum and 350 cellular sites in five telecom circles.
The letter mentioned that even though this process is well understood by DoT, it is not explicitly stated in the M&A guidelines. It further noted, hence Airtel is misusing the provisions under merger and acquisition guidelines of 2014 “with an intention to cause loss of revenue to the government exchequer”.
Jio, in the letter, stated that Airtel has exploited the loophole in guidelines in 2013 when it merged with Airtel Broadband Services Pvt. Ltd (ABSPL). Following which, DoT had asked Airtel to pay ₹436 crore.
There has been a raging war amongst the telecom operators where entry of Jio has prompted other operators to up their ante.
