Will Reliance Jio have to pay RCom's AGR dues?

The three-Judge bench of Supreme Court, which is hearing the dispute pertaining to the adjusted gross revenue (AGR) dues of telecom service providers, is expected to verify the spectrum sharing deal signed between Mukesh Ambani-controlled Reliance Jio Infocomm (RJIL) and his younger brother Anil Ambani's bankrupt telecom company, Reliance Communications (RCom) on Monday. The deal signed in 2016, majorly for using the 800 Megahertz (MHz) band, has helped RJIL to expand its coverage in 17 circles, besides giving service through its traded spectrum in nine circles.

The apex court on Friday asked why shouldn't RJIL pay the spectrum-related dues of RCom. The Anil Ambani company, which filed for bankruptcy last year, owes Department of Telecommunications (DoT) Rs 31,000 crore in statutory dues, including those of Sistema Shyam Teleservices which was merged with RCom.

"RJIL traded spectrum in 9 circles and shared spectrum in 17 circles in 800 MHz band," said Axis Capital in its report. RJIL shares about 38 per cent of the spectrum held by RCom, it added.

The sources close to Reliance Jio said that RJIL-RCom deal is strictly in accordance with DoT's spectrum sharing guidelines. RJIL is sharing a part of the spectrum in the 800 MHz band held by RCom and Reliance Tower Ltd (RTL) since April 2016. All the other 2G, 3G and 4G spectrum in 900, 1800 and 2100MHz bands of RCom are not being shared with RJIL.

"Both RJIL and RCom continue to discharge in full its AGR, Spectrum Usage Charges (SUC) and License Fee liability in respect of revenue from the shared spectrum," they said. Further, both the parties continue to pay additional SUC to the government towards the spectrum sharing arrangement, they added.

They argue that DoT has therefore realised almost in full the AGR and SUC revenues in respect of the shared spectrum, and would continue to realise these revenues from RJIL going forward. "The AGR dues of RCom and RTL are in no manner connected with this shared spectrum. AGR has been paid by both RCom or RTL and RJIL on the revenue generated from the shared spectrum," they said.

Another point what they raise is that the AGR dues in question are related to 2G, 3G business of RCom/RTL which it was carrying out prior to 2016, the time when RJIL was not even operational.

The Supreme Court in its record of proceedings directed the telecom companies to place on record the information relating to the spectrum sharing agreements. "In the case of RCom, its spectrum of 800 MHz is being used by RJIL from 2016. Let the agreement entered into between the parties be placed on record."

The apex court has issued similar direction to other companies which are under insolvency, including Aircel Limited, Aircel Cellular Limited and Dishnet Wireless Limited and Videocon Telecommunications Ltd, to specify who is using the spectrum. The bankrupt companies' committee of creditors (CoC), resolution professional and their counsels will have to give all the details of their spectrum usage and sharing.

The trouble is more for DoT. It will have to tell the court the name of users and date from which they use the spectrum. They will have to quantify the fees and AGR dues year-wise. The amount deposited with the DoT for using the spectrum should also be specified. The secretary of DoT will have to file the affidavit along with requisite documents.

Justice Arun Mishra, Justice S Abdul Nazeer and Justice MR Shah will continue the hearing on Monday. In the case, the incumbent telecom players Vodafone Idea, Bharti Airtel and Tata Teleservices have already sought a minimum 15 years time to pay off their AGR dues.

Also Read: AGR case: Why shouldn't Jio pay RCom dues, SC asks

Also Read: Jio-RCom spectrum sharing deal not linked with AGR liability, says report