Reliance Communications says Jio deal in jeopardy unless DoT clears

Reliance Jio Overtakes Vodafone To Become 2nd Largest Indian Telco by Revenue

Reliance Communications (RCom) has advised the Supreme Court on Monday that its spectrum buying and selling deal with Reliance Jio Infocomm (Jio) can be in jeopardy if the Telecom division doesn’t settle for a land parcel as safety as a substitute of financial institution ensures for reimbursement of earlier dues, and clears the spectrum buying and selling pact.

However, the Department of Telecommunications (DoT) mentioned it’ll solely settle for financial institution ensures for dues of about Rs 3000 crore and advised that Jio might additionally make the cost on RCom’s behalf, authorized sources current in court docket mentioned.

“RCom told the apex court that if DoT does not give an NOC (no-objection certificate) to the spectrum trading deal with Jio, then the deal will fall through. The operator argued that DoT should accept the land parcel as guarantee as per an earlier order, but DoT refused,” mentioned an individual conscious of the event.

Rcom didn’t reply to ET’s emailed queries searching for remark.

For Rcom, the spectrum deal is an important a part of its total asset sale to Mukesh Ambani-owned Jio, which can assist the operator to cut back its debt of Rs 46,000. If the deal falls by way of, then RCom will be unable to pay its dues to firms like Ericsson inside the stipulated time then it heads into insolvency.

The SC has set December 15 as the following deadline for RCom’s cost to Ericsson.

According to a different supply, DoT’s authorized representatives even advised the apex court docket that since it’ll solely settle for financial institution ensures and RCom says it can’t supply that , then perhaps Jio might accomplish that on the telco’s behalf.

Senior advocate Kapil Sibal assisted by advocate Mahesh Agarwal , appeared on behalf of RCom, whereas extra solicitor common P.S. Narasimha represented DoT. The matter can be heard on Tuesday as properly.

The battle between the Telecom division and the Anil Ambani owned telco is over spectrum associated dues value Rs 2,947.68 crore and has been on since DoT’s reluctance to offer the Jio deal a go forward until the federal government recovers its dues.

In an interim order in October, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) directed DoT to “expeditiously” permit the service to promote spectrum Jio with out financial institution ensures from Anil Ambani’s debt-laden telco. The tribunal additionally directed RCom to not promote a land parcel value Rs 1,400 crore “for the time being.” The land was slotted to be the assure towards the federal government’s demand for dues.

The DoT then moved a plea for modification of the order, saying it will possibly’t settle for land as a assure, and as a substitute pressed for financial institution ensures. The TDSAT had rejected this plea for modification, and DoT moved the apex court docket in one other bid to get better its dues.

RCom has been racing towards time to promote its spectrum to Jio, however the deal has been delayed primarily attributable to DoT’s demand for dues earlier than clearing the buying and selling pact. As a consequence, RCom, which mentioned it’ll repay Ericsson, and HSBC Daisy Investments and minority shareholders from the Rs 975 crore that it’s going to get from the Jio deal, has not been in a position to meet its cost commitments. RCom has been given time until December 15 to repay Ericsson its dues.

Recently ET had reported that RCom which narrowly evaded being dragged into chapter 11 proceedings earlier this 12 months, knowledgeable Delhi High Court it has round Rs 17.86 crore throughout its 119-odd financial institution accounts, whereas its subsidiary, RTL, has only a shade over Rs 1.48 crore throughout its 25-odd financial institution accounts. This was throughout one other authorized tussle with American Tower Corp (ATC), for not clearing its dues.

RCom, beneath a debt of Rs 46,000 crore, is desperately attempting to promote its belongings to Jio and Brookfield for about Rs 18,000 crore. While fibre and switching nodes have gone to Jio for Rs 5,000 crore, spectrum and towers are but to be offered to the Mukesh Ambani-owned telco and a few actual property sale to Canadian asset administration agency Brookfield can also be pending.

Shares of RCom closed at Rs 13.32, up by 0.30% on the BSE on Monday.

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