Rcom insolvency rescue plan hits DOT hurdle

DOT OPPOSED RCOM’S RESCUE PLAN CLAIMING THAT IT DID NOT TREAT THE WATCHDOG FAIRLY

MUMBAI/NEW DELHI: The department of telecommunications (DOT) on Wednesday opposed the insolvency resolution plan for Reliance Communications Ltd (Rcom) and its unit, Reliance Telecom Ltd (RTL), claiming the proposal does not give it a fair treatment.

The surprise department of telecommunications objection adds a new twist to Rcom’s ₹20,000-crore insolvency resolution plan that its lenders submitted for National Company Law Tribunal (NCLT) approval in March.

The National Company Law Tribunal counsel on Wednesday asked DOT to file an affidavit detailing its objection.

Significantly, this is the first time department of telecommunications had made its objections publicly known.

The department of telecommunications objection comes after the Supreme Court recently asked the government to clarify how it plans to recover dues from bankrupt telcos, which, apart from Rcom, also include Aircel and Videocon.

The court has previously asked the government to investigate whether any bankrupt telco is misusing the insolvency process to avoid paying dues.

The Supreme Court is also hearing arguments whether such companies can be allowed to sell spectrum held by them to repay dues.

UV Asset Reconstruction Co. Ltd (UV ARC) and Reliance Jio, the winning bidders for Rcom’s spectrum, real estate, enterprise, tower and data centre business, have together offered more than ₹20,000 crore (on net present value basis) for these assets.

At the time of filing for bankruptcy, Rcom owed ₹46,000 crore to its financial creditors alone, including Indian and overseas banks, non-bank lenders and funds.

Over and above this, the department of telecommunications estimated Rcom owes it ₹49,054 crore in unpaid spectrum usage charges and licence fees; however, the firm’s resolution plan recognises only ₹25,199 crore of dues.

If the current resolution plans by UV ARC and Jio are approved, the department of telecommunications will recover little, since under Insolvency and Bankruptcy Code, entities like department of telecommunications are operational creditors, which are second in line for dues after financial creditors.

The case will be heard next on 21 August.

Tanya Thomas and

Prathma Sharma contributed to this story.