RCOM refused extension for Ericsson payment; Aircel yet to receive payment

14 Dec 2018

India’s Supreme Court has dismissed a request from Reliance Communications (RCOM) for a further extension on its obligation to pay dues to Swedish equipment manufacturer Ericsson. The Economic Times writes that the debt-ridden telco is required to pay the vendor INR5.5 billion (USD76.8 million) by 15 December, failing which an insolvency order against the company will be revived. RCOM is attempting to complete the sale of its spectrum holdings to Reliance Jio Infocomm (Jio) to raise funds to repay Ericsson and clear other debts, but has been delayed from doing so by a feud with the Department of Telecommunications (DoT) of guarantees for spectrum fees. The company missed is previous deadline to repay Ericsson – 30 September – but late last month was given a reprieve when the apex court ruled in its favour against the DoT, granting the telco permission to use its real estate assets as a guarantee in lieu of a cash deposit, and potentially allowing it to go ahead with the transfer. However, the DoT is refusing to greenlight the sale, saying that it first needs to complete due diligence on the telco’s guarantee, but gave no timeframe for how long the process would take.

In a similar development, bankrupt cellco Aircel has returned to the Supreme Court saying that Bharti Airtel and the DoT have not complied with a previous order to repay it INR7.51 billion related to the cellco’s sale of spectrum rights to Airtel in 2016. The court had previously instructed Airtel and the DoT to return INR4.53 billion and INR2.98 billion, respectively, that had been submitted as guarantees to complete the spectrum sale.