Airtel, Vodafone, Idea indulging in blatant cartelisation: Reliance Jio

Mukesh Ambani-led Reliance Jio on Monday asserted that the margins in the telecom sector remain "healthy" even as it accused the big three operators of "cartelisation".

In a presentation to the inter-ministerial group, Jio said smaller operators are in financial distress because of actions of incumbent ones such as Airtel, Vodafone and Idea.

"... These three are now cartelising and seeking relief by leveraging the problems of smaller operators," Jio claimed.

It squarely blamed industry body COAI for the "state of the sector" and alleged that the "current stress can be equally attributed to COAI's anti-competitive actions over the years".

Jio further said the existing telecom operators are not investing in technology and instead passing the blame to the new operator for the sector's problems. "Incumbent operators that have tried to block the entry of the new operator and prevented launch of new technologies are now passing the blame and seeking relief," it added.

Interestingly, Jio has sought repayment of deferred payment liability for spectrum at a time when the other operators are unified in demanding that the period of repayment should in fact be extended to 20 years, the life of the spectrum. Mukesh Ambani-owned Reliance Jio on Monday said telcos not investing in new technology and instead leveraging their balance sheet are themselves to blame for financial difficulties.

Newcomer Reliance Jio, which met the Interministerial Group (IMG) on Monday said operators need to raise funds by selling stake or invest in new technology through internal accruals.

"Operators (excluding Jio) need to invest Rs 1,25,000 crore, payback debt and they need to invest in technology, as growth is happening in data...they can do this by selling stake," said a senior Jio official who did not want to be named.

Stating that the financial stress being faced by operators was "their own creation", the official said the only policy intervention required is in form of reduction in GST rates, licence fee and USO levies.

Lowering of these levies can generate Rs 20,000-25,000 crore additional EBITDA for the industry, the Jio official said after coming out from the 45-minute meeting with the IMG. The IMG on Monday began consultation with operators as part of efforts to address the financial difficulties being faced by the sector. The telcos are reeling under a massive Rs 4.6 lakh crore debt, and are facing pressure on revenue, profitability and all other financial matrix in face of increasing competition intensified by the entry of Jio.

Over the next few days, the IMG will also meet other operators including Bharti Airtel, Vodafone and Idea Cellular, as well as top officials of telecom PSUs BSNL and Mahanagar Telephone Nigam Ltd.