Court halts DoT from suspending Aircel spectrum licences

28 Nov 2019

The National Company Law Tribunal (NCLT) has directed the Department of Telecommunications (DoT) not to suspend the spectrum licences of bankrupt cellco Aircel, ruling that the concessions can be sold as part of the operator’s insolvency process, the Economic Times writes. Aircel is close to selling its assets as part of its insolvency process, and its spectrum holdings represent the bulk of the value of its remaining assets. The DoT has demanded the return of the airwaves, however, arguing that the frequencies are not an asset owned by the provider and as such cannot be sold as part of the insolvency process. The NCLT partly acknowledged the DoT’s position, recognising that ‘the licence/spectrum is an asset of state over which the corporate debtor has no right of ownership’ but rejected the ministry’s conclusions, explaining that Aircel’s insolvency resolution professional (RP) ‘is not demanding the ownership of the licence … but simply seeking uninterrupted use of the said intangible asset.’ On that basis, the court ruled that the ‘right to use’ the spectrum should continue for the licence period, and instructed the DoT ‘not to make any attempt to cancel the impugned license issued’. The decision could have an impact on Reliance Communications (RCOM), which is also in the midst of bankruptcy proceedings, but the ministry is expected to challenge the NCLT’s ruling in higher courts.

TeleGeography’s GlobalComms Database notes that the DoT’s opposition to the inclusion of Aircel’s spectrum licences in the resolution process is due in part to the structure of the proceedings, as the DoT would only receive a fraction of the proceeds from the sale of the frequencies, with most of the receipts going to the company’s other creditors.

India, Aircel, Department of Telecommunications (DoT), Reliance Communications (RCOM)