Reliance Jio won’t opt for 4-year payment moratorium

Reliance Jio has informed the telecom department that it will not opt for the four-year spectrum payment moratorium being offered by the government to telcos as part of a relief package, sources said.

The move comes even as its rivals Bharti Airtel and Vodafone Idea have said they will avail the four-year moratorium on payment of dues.

Sources told PTI that Jio has conveyed to the Department of Telecom (DoT) that it will not opt for the moratorium.

An email sent to Reliance Jio on the matter did not elicit a response.

Reliance Jio had last week paid about Rs 10,700 crore to the telecom department towards outstanding amount for spectrum acquired in the 2016 auction.

With that, Jio — India’s largest telecom operator — made full payment with regard to spectrum bought in 2016. Its outstandings now pertain to the 2014, 2015 and 2021 auctions.

Industry watchers pointed out that Jio not taking up the moratorium needs to be viewed in the backdrop of the fact that the company has already cleared its remaining dues for spectrum bought in 2016, and its outstanding for 2014 and 2015 is not very high.

The government recently approved a blockbuster relief package for the telecom sector that included a four-year break for companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100 per cent foreign investment through the automatic route.

The measures, aimed at providing relief to companies such as Vodafone Idea that have to pay thousands of crores in unprovisioned past statutory dues, also include the scrapping of Spectrum Usage Charge (SUC) for airwaves acquired in future spectrum auctions.

The government has offered telcos the option to defer payment of the spectrum auction instalments due up to four years, with immediate effect, excluding the installments due for spectrum auction in 2021.

This option is applicable from FY 2022-23 to FY 2025-26.

These deferred amounts will be spread equally over the remaining instalments to be paid, without any increase in the existing time period specified for making the payments.

Interest as stipulated in the relevant year of auction of spectrum will, however, be charged so that the net present value (NPV) of the payable amount is protected.

Also, the government has given an option to the telcos to pay the interest amount arising due to the said deferment of payment, by way of equity.

The government will also have an option to convert the due amount pertaining to the deferred payment into equity at the end of the moratorium/deferment period.

After the package was announced, DoT wrote to telcos including Bharti Airtel, Vodafone Idea and Reliance Jio asking them to convey by October 29 (Friday) if they would be opting for the four-year moratorium.

It also gave 90 days’ time to the operators to indicate if they want to opt for converting the interest amount pertaining to the moratorium period into equity.

Both Bharti Airtel and Vodafone Idea (VIL) have said they will opt for the moratorium, a move that market analysts say will free up cash flow to the tune of thousands of crores for these telcos.

On Friday, VIL in a regulatory filing said its board has approved the exercise of the option of deferment of AGR related dues by a period of four years with immediate effect. PTI