RCOM scraps Jio asset sale plan, clears Ericsson dues

19 Mar 2019

Bankrupt telco Reliance Communications (RCOM) has cancelled its asset sale plan with Reliance Jio Infocomm (Jio), citing a lack of consent from its lenders and difficulty in securing the necessary permissions from regulators, the Economic Times writes. The agreements were signed in December 2017 and August 2018 and would have seen RCOM offload 122.4MHz of spectrum and around 43,000 telecom towers to Jio. A related agreement for the sale of 178,000km of fibre and 248 Media Convergence Nodes (MCNs) to Jio for INR50 billion was completed in August 2018, however.

In a related development, meanwhile, RCOM has completed payment of dues and interest totalling INR5.8 billion to Swedish vendor Ericsson, after the outstanding sum of INR4.6 billion was paid yesterday. RCOM had previously planned to use the funds raised by the asset sale to clear its payment to Ericsson, but legal disputes with the Department of Telecommunications (DoT) over regulatory clearance for the deal meant that the operator missed several deadlines for payments. Assurances from RCOM Chairman Anil Ambani that the sum would be paid led the official to being held in contempt by the Supreme Court, with the apex court threatening to imprison Mr Ambani – along with his colleagues Chhaya Virani and Satish Seth, the chairs of RCOM units Reliance Infratel and Reliance Telecom – if the dues were not paid by a final deadline of 19 March. The final RCOM payment was reportedly funded by Jio owner Mukesh Ambani, the older brother of Anil Ambani. The Economic Times cites sources familiar with the matter as saying that billionaire Mukesh Ambani – India’s richest man – paid the amount outright, whilst a statement from RCOM simply confirmed that the amount had been paid, with a quote from Anil Ambani thanking his family for their support.