Shortfall of Rs 400 cr on breach of licence terms, says Reliance Jio

Reliance Jio said the government suffered a revenue shortfall of over Rs 400 crore in FY17 because incumbent telcos violated licence conditions.

Jio in a letter to Department of Telecommunications (DoT) said incumbent telcos paid advanced licence fee for Q4 on the basis of estimated adjusted gross revenue (AGR) for the quarter, which is much lower.

But Cellular Operators Association of India (COAI) said there will be no loss to the government as “AGR will be trued up to actual in the subsequent quarter”.

COAI on March 1 had written a letter requesting DoT to allow member telcos to pay licence fee based on estimated AGR due to financial conditions of the operators.

Jio, owned by billionaire Mukesh Ambani, said it is mentioned in the licence condition that quarterly instalment of licence fee for first three quarters of the financial year shall be paid within 15 days of the completion of the relevant quarter and for the last quarter, the fee should be paid by March 25 on the basis of expected revenue, subject to a minimum payment equal to the revenue share paid for the previous quarter.

The letter by Jio said the difference between advance payment made and actual amount duly payable for the last quarter shall be adjusted by DoT within 15 days of the end of the quarter.

However, Jio alleged that the incumbents “willfully, unilaterally and intentionally” paid a licence fee based on estimated AGR, which was much lower than the licence stipulation to pay the fee not less than the fee paid for the third quarter.

Sharing financial numbers, Jio said Airtel paid an estimated licence fee of Rs 950 crore for Q4 while it paid Rs 1,099.5 crore for Q3. 

It said Vodafone paid Rs 550 crore for Q4 as against Rs 746.8 crore in Q3 and Idea Cellular paid Rs 550 crore as against Rs 609.4 crore in Q3.

Jio said the act of incumbent telcos has caused a potential financial loss and in any event a revenue shortfall of over Rs 400 crore in FY17.

Though the DoT was yet to accept the demand of COAI but the incumbent telcos paid the licence fee based on estimated AGR, Jio said.

COAI said decline in revenue was never contemplated when setting the licence conditions. 

“We have submitted our factual representation of what the industry is going through and a bare reading of that will adequately clarify that our members have categorically stated, even in their submission to DoT, that they will confirm and pay the licence fee on or before April 15, 2017,” COAI said, adding, “with this, there is no loss to the government also as the licence fee will be paid on actual revenue.”

Sharing financial numbers of Airtel, Jio said the actual AGR of Airtel for Q4 was substantially higher than that estimated by it in March for paying the advance licence fee. “Review of financial statements of Airtel reflects that the licence fee payable in Q4 should have been over Rs 1,030 crore as against the approximate amount of Rs 950 crore actually paid,” Jio said.

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