Reliance Jio Says Rivals' Failure to Invest in Tech Causing Financial Stress

Reliance Jio Says Rivals' Failure to Invest in Tech Causing Financial Stress”

As an inter-ministerial group (IMG) began hearing operators on reasons for telecom sector being dragged towards loan defaults, Jio launched a scathing attack on Airtel, Vodafone India and Idea Cellular accusing them of cartelisation and blaming financial woes on their reluctance to use equity for investing into new technology.

While the Mukesh Ambani firm blamed availability of easy credit to buy spectrum for worsening the situation, other operators said reduced cashflows were hampering capacity of telecom companies. Their excessive dependence on debt had led to "unsustainable balance sheets", the company added.

TRAI data showed that Jio was also the leader in wireless broadband services with 112.55 million customers, followed by Bharti Airtel with 52.25 million, Vodafone with 39.76 million, and Idea Cellular with 24.09 million.

The first of these meetings kick-off tomorrow, with the group slated to meet senior executives from Reliance Jio, Reliance Communications, Tata Teleservices and Aircel, sources told the news agency.

As per the presentation by Jio, 70-80 per cent of total debt as deferred payment highlights that operators have not invested in new technology.

It went on to cite Airtel investing Rs 40,000 crore to acquire Zain Africa and that UK's Vodafone paid premium to acquire stake of Hutch and Essar.

". These three are now cartelising and seeking relief by leveraging the problems of smaller operators", Jio claimed.

It said that there is a "strong sign of cartelisation" in the behaviour of the three big operators "as tariffs were aligned and created to thwart entry of new operators", adding that both TRAI and CCI have found evidence of cartelisation in the behaviour of Bharti Airtel, Vodafone and Idea.

"The state of the sector is known to all". Jio said the financial stress has been caused due to aggressive financing strategies and not investing in new technologies, even though the sector fundamentals remain robust.

The industry also wants the deferred payment liability of spectrum to be aligned to the life of the airwaves, that is, 20 years with a moratorium of five years and repayment of 15 years.

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