Battle between Reliance Communication and Bharti Airtel on spectrum is now out in the open. Reliance Communications’ Chairman Anil Ambani has, in a letter to the Prime Minister, questioned the propriety of the plan to impose a one-time fee on 4.4 Mhz spectrum and upwards. The letter alleges that the policy is loaded in favour of a “coterie led by Bharti Airtel”.
“When I look at the completely biased and partisan approach adopted by the Department of Telecom against new players like Reliance and Tatas, to the staggering financial advantage of the older coterie of GSM operators led by Bharti Airtel, I am left wondering whether all this can be attributed just to poor judgment, or there is something more than meets the eye,” Ambani wrote. The letter dated October 11 was sent ahead of the last meeting of the Empowered Group of Ministers on this issue.
Unusual decision
The EGoM had overruled an opinion by the Attorney-General and fixed the spectrum cut-off limit at 4.4 Mhz for GSM and 2.5 Mhz for CDMA. The AG had opined that the cut-off be set at 6.2 Mhz. Due to the EGoM’s decision, RCom has to pay for the additional 2.5 Mhz of CDMA spectrum. It also won’t be able to apply for additional spectrum beyond 4.4 Mhz.
Ambani termed the EGoM’s decision highly unusual. “The views of the Deputy Chairman of the Planning Commission who had endorsed the approach of the learned AG have also been brushed aside,” he said. Ambani claimed that international lenders, rating agencies and investors were aghast at the new EGoM decisions which, he said, destroy the sanctity of past contracts.
According to analysts, the one-time fee will cost the operators around Rs 30,000 crore. Bharti Airtel and RCom would have to pay Rs 4,000-5,000 crore. Had the cut-off been set at 6.2 Mhz, RCom would not have had to pay anything.
“The global community is also concerned that these decisions of the EGoM will lead to fresh protracted litigation and widespread adverse international coverage,” he said.