RCOM creditors clear spectrum charges; Telenor takeover faces further holdups

24 Apr 2018

Reliance Communications’ (RCOM’s) creditors, led by the State Bank of India (SBI), have agreed to pay INR7.74 billion (USD116.4 million) in deferred spectrum charges to prevent further litigation from delaying the sale of RCOM’s assets to Reliance Jio Infocomm (Jio). The Economic Times cites sources close to the development as saying that Department of Telecommunications (DoT) had refused to grant RCOM an extension to clear the dues – due on 20 April, for the frequencies purchased at auction in 2013 and 2015 – prompting the operator to file an appeal with the Supreme Court. According to the sources, the creditors felt that there was no need to further delay the Jio deal with additional litigation. The transaction was due to be completed in March this year but has been held up by disagreements with vendors and minority shareholders.

In a related development, the acquisition of Telenor India by Bharti Airtel has also run into difficulties, as a disagreement with the nation’s regulatory agencies over a bank guarantee from Airtel has delayed the closing of the deal beyond the anticipated twelve-month time-frame. The acquisition plan was agreed back in February last year and was expected to be completed by February 2018. Having overshot that date, Telenor is reportedly considering filing for bankruptcy protection as it generates daily losses of around INR40 million from its operations in six circles, adding to its existing debt pile of INR60 billion. The DoT is expected to file an appeal with the Supreme Court to overturn a ruling from the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) that had ordered it to approve the Airtel/Telenor deal without a bank guarantee. The ministry had asked Airtel to submit a guarantee of around INR17 billion as a condition of its approval of the merger. The guarantee relates to a one-time spectrum charge (OTSC) of INR15 billion for airwaves allocated to Airtel without auction, plus INR2 billion for Telenor’s outstanding spectrum fees.

India, Bharti Airtel, Department of Telecommunications (DoT), Reliance Communications (RCOM), Reliance Jio Infocomm (Jio), Telenor India