In March this year, we had reported about a mega deal in Indian telecom circle, when Tikona announced its merger with Airtel. Strategically, this merger made Airtel as the strongest player in UP, Himachal, Rajasthan & Gujarat circles, as Tikona controls highly crucial 4G spectrum in these states, something which Airtel doesn’t have.
Now, after almost two months of this announcement, Reliance Jio has come up with serious objections to this merger, citing huge financial losses to the Govt.
In a strongly worded letter to Department of Telecom, Jio has claimed that the merger will lead to losses worth Rs 217 crore to the national exchequer because it breaks Mergers and Acquisition Laws.
Airtel-Tikona Merger is Breaking Laws?
As observed by telecom analysts in the month of March, Tikona’s merger with Airtel was primarily done for accessing spectrum for 4G. However, officially speaking, the deal was coloured as a part of M&A, so as to “circumvent spectrum trading guidelines which only permit trading between access service providers and not from ISP holders”.
In the letter, Jio said, “The arrangement clearly implies that Airtel’s acquisition of Tikona is only for the spectrum assets and has been done to circumvent spectrum trading guidelines which only permit trading between access service providers and not from ISP holders”
Jio has claimed that Airtel has deliberately and intentionally exploited the loopholes under such Merger & Acquisition rules, in order to gain unethical business advantages. In fact, as per Jio, Airtel had used the same loophole while acquiring Qualcomm’s Broadband Wireless business as well.
The matter is still being sorted out at telecom tribunal after DoT objected to it.
Which Laws Are Being Broken By Airtel?
Tikona’s Broadband Wireless Access (BWA) spectrum, which Airtel is aiming to use for their 4G services, can be only used for providing data services. While Airtel will offer voice services as well.
And this is the core issue.
As per the rules, in order to use BWA for any other services besides data, the telecom operator will be required to migrate to Unified License (UL) regime.
In fact, Jio paid Rs 1658 crore for similar migration of BWA into UL in 2013. Jio is seeking a refund of that amount if Airtel is allowed to carry on with the merger of Tikona, and subsequently, use BWA for voice and data.
Airtel has responded by saying: “Bharti Airtel has always been and will continue to be fully compliant with all regulatory guidelines. We strongly deny these allegations, which is yet another mischievous attempt to throttle/block competition.”
We will keep you updated as we receive more information regarding this matter."Reliance Jio Strongly Objects To Airtel-Tikona Merger; Claims This Will Lead To Rs 217 Cr Losses To Govt!",