Reliance Jio may have to bear some of RCom’s AGR dues

MUMBAI: The Department of Telecommunications (DoT) has veered around to the view that Reliance Jio needs to shoulder some of Reliance Communications’ (RCom) over Rs 21,140-crore adjusted gross revenues (AGR)-based dues, for the spectrum that the Mukesh Ambani-led telecom operator had bought from the bankrupt telco in 2016.“The AGR dues that Jio will need to pay will include those on RCom’s spectrum that was part of the 2016 trading deal,” said a senior official in telecom department, who did not want to be named.The DoT has sent notices to all telcos to self-assess and pay their dues in three months from the apex court order of October 24. Officials say in case of any discrepancies between the telco and DoT calculations, the department will send fresh notices for the balance.Jio had bought more than 45 MHz of airwaves across 13 circles in 800 MHz band from RCom in 2016, through a spectrumtrading pact. Under bandwidth trading rules of 2015, the seller is expected to clear all dues prior to concluding any deal. After that, dues become the buyer’s liability. Further, in case any dues are discovered after the deal takes effect, DoT can recover this from one or both sides.Jio didn’t respond to ET’s emailed queries. But sources at the telco said Jio can’t be held liable for RCom’s past spectrum dues, citing excerpts from a February 2019 telecom tribunal order in a separate spectrum trading case. It ruled that the Mukesh Ambani-owned telco won’t be responsible for RCom’s previous spectrum dues. They added that a subsequent Supreme Court judgement of July dismissed DoT’s challenge of the tribunal order.But DoT officials say the rules are clear on the liabilities in a trading deal.“The seller shall clear all its dues prior to concluding any spectrum trading. Thereafter, any dues recoverable up to the effective date of trade shall be a liability of the buyer,” according to the rules. “The government shall, at its discretion, be entitled to recover the amount, if any, found recoverable subsequent to the effective date of the trade, which was not known to the parties at the time of the effective date of trade, from the buyer or the seller, jointly or severally.” 72251443 Moreover, a May 20, 2016 letter from the DoT to the two telcos – Jio and RCom – clarified the rules further, citing para 11 of the trading rules on the liability of dues in case of trading deals.Also, the two carriers had written to DoT in January 2016, accepting rules of trading. “...agree that in the event, it is established at any stage that either of the licencees was not in conformance with the terms and conditions of guidelines for spectrum trading or/and of the licence at the time of giving intimation for trading of right to use the spectrum, the government will have the right to take appropriate action which inter-alia may include annulment of trading arrangement,” their confirmation letter stated.The development will come as a rude shock to Jio which appeared to have been least affected by the Supreme Court verdict widening the definition of AGR to include non-core items. As per the DoT’s initial calculations, Jio, which started operations in September 2016, owed Rs 60.52 crore to the government, compared with over Rs 53,000 crore for Vodafone Idea and over Rs 35,500 crore for Bharti Airtel. In total, some 15 telcos are liable to pay Rs 1.47 lakh crore in AGR dues.RCom’s dues were at Rs 21,140.78 crore, including licence fees, spectrum usage charge (SUC), penalties and interest. The amounts are as per telecom ministry submissions in Parliament. Licence fees and SUC are paid on the basis of AGR. The company is currently undergoing insolvency proceedings in the National Company Law Tribunal (NCLT).Some estimates have put Jio’s portion of RCom’s dues at around Rs 10,000 crore, but it has not been independently confirmed.The official added that the department would need to move the National Company Law Tribunal (NCLT) to recover the rest of RCom’s dues, as the telco is in the midst of insolvency proceedings.

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