Reliance Industries Ltd has strongly dismissed the allegations made by the Comptroller & Auditor General of India saying that its telecom subsidiary Reliance Jio has followed rules laid out by the Government from time to time.
A draft report prepared by the CAG has rejected the telecom department’s stand allowing Reliance Jio to offer voice telephony using broadband spectrum against a payment of ₹1,658 crore. The CAG said that had the Department of Telecommunications (DoT) made it clear that voice service was permitted, there would have been more demand for spectrum during the auctions held in 2010.
Replying to a questionnaire sent by
On CAG’s allegations that Infotel Broadband (the company which RIL acquired), with a low net worth, was allowed to acquire expensive spectrum, the Reliance spokesperson said that Infotel Broadband (IBSPL) fulfilled all the eligibility conditions to participate in the auction.
On June 11, 2010, RIL announced that it has entered into an agreement to acquire a substantial stake in Infotel for ₹4,800 crore. “These investments were in full compliance with the prevailing guidelines of DoT, the Companies Act and all applicable laws of the country. No lock-in period was prescribed by DoT for the broadband spectrum in the pre-auction guidelines.”
“The auction guidelines were applicable uniformly to all the participants. RIL invested in IBSPL by subscribing to the fresh equity shares at par. The entire investment of RIL was into the company and there was no transfer of shares by any existing shareholders of IBSPL,” RIL said.
Reliance said that the Government has realised full value of the spectrum since all the bidders including IBSPL acquired the spectrum at an auction-determined price.
As per the auction rules, a broadband spectrum holder can provide all the telecom services which are allowed by the respective licence it holds or acquires from time to time. Thus an operator with mobile telephony with broadband spectrum can provide all the telecom services including voice but an Internet licensee could do primarily data services.
When the Unified Licensing regime was implemented, every licence holder, including Internet operators, was permitted to migrate by paying the prescribed fee. The UL regime allows a licensee to provide all services including voice services. Therefore a broadband spectrum holder who migrated to unified licence is allowed to provide all services including voice telephony, the RIL spokesperson said.
“To say that ₹1,658 crore is not appropriate is a travesty of justice. The very sum was paid by the operators in year 2001 to acquire the licence against which they got start-up spectrum of 4.4 MHz. Reliance Jio never got any start-up spectrum against ₹1,658 crore paid as additional fee.”