October 31, 2019 / 12:12 PM / a month ago

UPDATE 2-Reliance's Jio criticises telecom lobby warnings on sector health

(Updates to add Bharti, lobby group comment)

NEW DELHI, Oct 31 (Reuters) - Jio Infocomm, the telecoms arm of Reliance Industries’, criticised on Thursday the industry lobby’s push for the Indian government to intervene after a court ruling left rivals Bharti Airtel and Vodafone Idea facing billions of dollars in costs.

India’s Supreme Court last week upheld a demand by the Indian Department of Telecommunications (DoT) that wireless carriers pay nearly $13 billion in overdue levies and interest.

After the court ruling the Cellular Operators Association of India (COAI) wrote to Telecommunications Minister Ravi Shankar Prasad on Oct. 29 to warn of an “unprecedented crisis” in the industry if the fines are imposed.

The ruling will force Bharti and Vodafone Idea to pay the bulk of 920 billion rupees ($13 billion) in overdue levies and interest owed by the industry.

Jio is also affected by the judgment, but its exposure is much lower since it only began operations three years ago.

On Thursday, Jio accused the COAI of using a “threatening and blackmailing tone” with the government when it spoke of potential job losses in the sector, a deterioration in service quality and cutbacks in investments.

“COAI is clearly insinuating that if the immediate relief... is not provided, the two operators might stop operations,” Jio said in letter released to media on Thursday.

“We request the government to strongly rebuff such suggestions and insinuations.”

Jio said rival mobile carriers could pay off the dues by monetizing their assets and investments or issuing fresh equity.

Jio’s view on rival carriers is a private matter between COAI members, and will be addressed within the framework of the group’s governance structure, the COAI said in a statement.

Telecoms analysts have warned that while Bharti might be able to scrape through if the government presses on with its financial demands, Vodafone Idea could be forced to shut up shop.

Both carriers reported losses for the April-June quarter and are each saddled with more than 1 trillion rupees ($14.08 billion) of debt.

Bharti declined to comment while Vodafone Idea did not respond to a request for comment.

Jio, controlled by India’s richest man Mukesh Ambani, began operations in late 2016 with free voice and cut-price data, forcing rivals to match prices and triggering consolidation in an overcrowded sector.

Since then, it has typically been at odds with rivals over issues such as interconnection charges, and a fee operators pay each other for calls made from one network to another.

Jio, built with an investment of around $40 billion, has won more than 340 million subscribers with its cut-price offerings but has had to pay a high fee to its rivals because they have more customers.

Its strongly worded letter comes a day after it publicly accused the COAI of a “prejudiced mindset”. ($1 = 71.0180 Indian rupees) (Reporting by Sankalp Phartiyal; Editing by Sanjeev Miglani, Jan Harvey and Susan Fenton)

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