Aircel FACES bankruptcy

• Debt of over Rs 16,000 cr • • 85 million subscribers will have to port • • To impact vendors, distributors and staff •

Billionaire T Ananda Krishnan's Aircel has filed for bankruptcy as the company is facing "troubled times" in a "highly financially stress-ed" industry. It has accordingly moved the bankruptcy and insolvency resolution court.

The court will now appoint a representative that will try to figure out how Aircel can pay its debt. If the exercise fails, the company will be declared bankrupt and its assets will be used to recover the bad debts.

Aircel has nearly 85 million subscribers. In the last several weeks, many of these subscribers have ported out to companies like Airtel and Jio. In the coming days, it is expected that more will port. Aircel, however, said it will strive to provide uninterrupted service to those customers who decide to stick around in the "difficult period".

The move comes on the heels of a January 19 meeting with lenders where the company's promoters were asked to invest at least a billion dollars to enable the company to meet its financial obligations. Aircel is owned by Malaysian company Maxis, which has run a debt of over Rs 16,000 crores taken from a consortium of banks led by the State Bank of India.

Aircel shutting down is expected to impact tower firms, vendors, distributors and 500 employees associated with the operator. In a statement, the company said that intense competition following the disruptive entry of a new player, legal and regulatory challenges, high level of unsustainable debt and increased losses had together caused significant "business and reputational impact" on the company.

The reference possibly is to entry of Reliance Jio in 2016 with free voice and cut-price data plans, which forced smaller operators to exit the crowded and competitive telecoms market; meanwhile, bigger players such as Idea Cellular and Vodafone Group’s Indian unit are merging to stave off competition. The company statement also noted that efforts to merge wireless business with another operator did not yield any results and had ultimately lapsed in September 2017. That proved the last nail in the coffin.