RCOM deadlock drags on

8 Jan 2019

Reliance Communications’ (RCOM’s) legal disputes with the Department of Telecommunications (DoT) and Ericsson continued this week, as the operator comes under increasing pressure to complete the sale of its spectrum to Reliance Jio Infocomm (Jio) and clear its dues to the Swedish vendor. The Economic Times reports that RCOM announced yesterday that it had submitted a partial payment of INR1.31 billion (USD18.8 million) – of the INR5.5 billion it had agreed to pay Ericsson – out of available operational funds. The operator said in a statement that it was taking ‘all required steps towards enabling the settlement and remains fully committed to make the payment to Ericsson from the proceeds of the spectrum sale.’

Regarding the spectrum sale, the DoT has refused to provide any assurances to Jio that it will not be liable for any past liabilities related the spectrum. A senior DoT official was quoted as saying of the matter: ‘There is no question of giving any kind of immunity to the new buyer. It is public money, and we will take it from whoever owns it in case the corporate guarantee that RCOM is providing us does not prove to be sufficient.’ The Supreme Court has asked RCOM and Jio to reach an agreement on the handling of past liabilities for the spectrum by 11 January: representatives for RCOM have said that the company is willing to accept responsibility for historical payments for the frequencies, but the company has struggled to provide bank guarantees for other parts of the deal and the DoT has so far proved reluctant to compromise on such matters without direction from the courts. Jio, for its part, is similarly digging in its heels, and has refused to provide an undertaking that it will abide by spectrum sale guidelines lest it be left to foot the bill for up to INR30 billion in various historical fees that are currently being contested by the industry.