Mukesh Ambani has a problem with pre-paid top-ups from old Rs 500 notes. Here’s why

Mukesh Ambani is speaking out regarding top-ups with old currency notes in pre-paids and is at loggerheads with Airtel, Vodafone and Idea. Ambani-led Reliance Jio believes that the move to allow top-ups with the demonetised rs 500 notes till December 15can be misused to convert black money to white.

This view was dismissed by nearly all the members of the Cellular Operators Association of India (COAI) and this is where Jio raised its contention.

Experts also believe that to some extent, concerns raised by Jio may be right as there is no clarity on the number of top-ups a prepaid user can do with the old Rs 500 notes.

"A truant retailer in a Tier 2/3 town or a village can easily prey on an ignorant customer by saying that the government is only allowing top-ups up to 500, but that he is ready to offer multiple recharges for a commission to help them dispose of defunct cash. Also, a person can convert his own demonetised 500 notes into legal tender through multiple recharges," a senior executive, told ET.

This could also affect Jio’s prepaid users, who make upto the 90% of the teleco user base as they, in order to convert the black money to white would load up on talk-time before 15th December.

"Such a scenario would reduce the immediate appetite for Jio's offerings as customers would get locked in to incumbents for multiple months," another industry executive familiar with the issue, told ET.

Last month, COAI had written to telecom minister Manoj Sinha seeking a relaxation in demonetisation rules to enable distributors and retailers to accept old currency notes in the interest of consumers, especially since telecom is an essential service. COAI had, however, mentioned in its letter that only Jio held a divergent view on the issue as it feared misuse.

COAI represents India's three largest phone companies - Bharti Airtel, Vodafone India and Idea Cellular-besides Jio.