Info-tech

RJio: Vodafone Idea, Airtel blaming govt for their failures

S Ronendra Singh New Delhi | Updated on November 02, 2019 Published on October 30, 2019

File photo   -  REUTERS

Reliance arm against any government bailout package

At a time when Airtel and Vodafone Idea are seeking a bailout package from the Telecom Ministry, rival player Reliance Jio on Wednesday said that the incumbent operators are shedding crocodile tears and are blaming the government for their own failures.

“The failure of the two operators, even in the unlikely event of it actually happening, will not have any impact on the sector dynamics with the existence of vibrant competition including the presence of PSUs and there is no restriction on entry of new operators. Further, there will be no impact on the digitisation and Government programmes, as these operators, anyway were not investing sufficiently in the sector and have been shedding crocodile tears by claiming financial stress for a long time now,” Reliance Jio said in a communication to the Cellular Operators’ Association of India, the industry body representing the incumbent operators.

COAI criticised

The trigger for Jio’s attack is COAI’s letter to Telecom Minister Ravi Shankar Prasad on the crisis in the industry, which did not include RJio’s comments. In the letter, the operators’ body expressed deep concern over the Supreme Court’s ruling on Adjusted Gross Revenue, claiming that it would impact the industry’s ability to make further investments, which in turn would lead to decline in service quality, a possible monopoly and jeopardising government initiatives.

Jio, which has not been impacted by the AGR ruling, said that COAI was not an industry organisation but just a mouthpiece of two service providers. Jio is of the opinion that the apex court’s ruling should be implemented. It said that the failure of these operators cannot be blamed on the government. The financial difficulties of these operators were due to their own commercial decisions.

“The government should not be obliged to bail them out for their own commercial failure and financial mismanagement,” it added.

The SC ruling on AGR hits Vodafone Idea the hardest as it may have to clear dues of around ₹40,000 crore. Airtel may have to pay ₹35,000 crore. This comes even as both operators are struggling under a huge debt pile. Both operators are hoping to get a bailout package from the Centre to ride the financial stress.

According to industry analysts, without government support, it would be difficult for Vodafone Idea to sustain its operations. Airtel is better off and may actually gain if Vodafone Idea collapses as the market will be reduced to just two private players and one weak public sector undertaking.

Jio will be the biggest gainer as it does not have legacy dues to pay. The recent move by Reliance Industries to make Jio practically debt-free also positions the telecom company to emerge as the strongest player going forward.

 

 

Published on October 30, 2019
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