The Department of Telecom is scrutinizing the spectrum-sharing deal between Reliance Communications (RCom) and Reliance Jio Infocomm after the Anil Ambani company defaulted on a payment of Rs 21 crore towards installment for spectrum in the Mumbai circle earlier this month.
DoT officials are of the view that airwaves in circles for which there has been a default in payment can’t be shared or traded.
Jio shares RCom’s airwaves in the 850 MHz band in 21 circles, including Mumbai, and scrapping airwaves could end up disrupting Jio’s services. But the matter could be a long-drawn affair as it’s likely to be decided by the courts in the end, said people familiar with the matter.
In addition to the Mumbai circle, for which it has missed the payment deadline, RCom — weighed under a debt of Rs 46,000 crore — is due to pay Rs 281crore for eight circles and an additional Rs 492 crore for 13 circles next month.
According to DoT officials, who did not want to be identified, the government will be forced to take back spectrum from an operator who does not pay the dues for a specific circle, irrespective of the sharing agreements it has with any other telco.
“Spectrum is a national asset. One cannot have it and not pay the dues. It does not matter if RCom is using it or Jio. We need to get our dues or we (will) revoke the licence for that spectrum,” said an official.
The DoT has already served a show-cause notice on RCom for defaulting on the Rs 21-crore spectrum payment. The operator though has moved an appellate tribunal, asking it to direct the telecom department not to cancel its mobile permits for missing the payment. The next hearing is on March 26.
The telco claims that, in fact, it’s DoT that needs to return money to RCom.
According to people familiar with the matter, RCom — in response to the show-cause notice — pointed out that the department is yet to return Rs 2000 crore of bank guarantees despite an appellate court’s orders. The telco said the DoT had encashed an excess of Rs 750 crore of bank guarantees over the past few years, which must be returned as well.
The person also said that as per an earlier order of the dedicated bankruptcy court, RCom is under a payment moratorium as ordered by an appellate tribunal and none of its resources can be withdrawn.
Officials in DoT though refute RCom’s claims and have already started the process of invoking bank guarantee for the missed payment of Rs 21 crore despite protests by the telco and its banker SBI.
While people familiar with the thinking in Jio admitted that services could be affected if its pacts with RCom are scrapped — despite them having spectrum in 1800 MHz and 2300 MHz bands as fallbacks — the Mukesh Ambani-owned telco is confident things won’t come to that stage.
The people added that Jio would be using RCom’s airwaves even as the Anil Ambani-owned telco goes through the insolvency process in the National Company Law Tribunal (NCLT). Jio also expects to bid for and buy RCom’s airwaves at a cheaper rate through any NCLTrun sale than what it would have paid through the recently scrapped spectrum-trading deal.
“The insolvency process will take at least a few months and until then Jio can use RCom’s spectrum. After that, when the bidding starts, the price at which the spectrum goes will be much reduced since the time left for expiry will be shorter,” said the person. “Jio, therefore, can pick up the spectrum at a cheaper rate.”
RCom recently terminated an Rs 7300-crore deal to sell 122.4 MHz of spectrum in the 850 MHz band to Jio, due mainly to DoT’s refusal to grant approval as the latest entrant didn’t agree to bear RCom’s historical dues.―Business Telegraph