Jio to DoT: Don't okay Airtel's Tikona acquisition until it pays Rs 217 cr

Jio said that Airtel was misusing the merger and acquisition guidelines

In a fresh salvo against market leader Bharti Airtel, rival Reliance Jio said the department of telecommunications (DoT) should not approve the Airtel-Tikona deal unless Airtel pays Rs 217 crore as migration fee for using broadband wireless access (BWA) spectrum under the unified licence (UL).

In a letter written to the DoT on May 15, Jio said that Airtel, which announced a 1600-crore deal to acquire the 4G business of Tikona Digital Networks, was misusing the merger and acquisition (M&A) guidelines “with an intention to cause loss of revenue to the government exchequer”.

To migrate from ISP (internet service provider) with BWA spectrum to the UL regime with authorisation for providing access services, an additional fee equal to the difference between the entry fee for UASL (unified access service licence) and entry fee paid for ISP licence shall be payable in addition to the entry fee as applicable for new UL, Jio said citing the UL guidelines.

The Mukesh Ambani firm said it paid Rs 1,658 crore to the DoT for migration of its ISP licence with BWA spectrum to UL. Jio further said while the principle was well understood by the DoT and all stakeholders, it was not stated explicitly in the M&A guidelines and as a result was being misused by Airtel to delay legitimate dues to the government.

Jio said Airtel had earlier misused the apparent gap in the M&A guidelines to avoid paying fees when it announced the merger with Airtel Broadband Services Private Limited (ABSPL) in 2013. ABSPL was initially a joint venture between Qualcomm and Airtel, holding ISP licence with BWA spectrum. 

For the ABSPL deal, the DoT raised a demand of Rs 436.09 crore against Airtel as an entry fee for migration from ISP licence of ABSPL to access services of Airtel. However, Airtel refuted the demand and appealed before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). Airtel argued that the transaction was not a migration of licence but an acquisition of a company owning BWA spectrum with ISP licence by a UL licensee. The matter is currently sub-judice. 

Jio said Airtel was attempting the same strategy for the proposed Tikona acquisition. Jio said the DoT should not approve the Tikona deal until Airtel paid Rs 217 crore. Alternatively, Jio said the DoT should consider the refund of Rs 1,658 crore paid by it in order to ensure a level-playing field.