RCOM SET TO LOSE LICENCE OVER PAYMENT DEFAULT
The Department of Telecommunications is inching towards cancellation of the telecom licence of Anil Ambani’s Reliance Communications (Rcom) over a payment default. It is learnt that a show cause notice will be issued to the company, according to procedure, before moving ahead with the cancellation of licence. According to an official, clauses under the license pact empower the government to terminate the licence.
The Department of Telecommunications (DOT) is inching towards cancellation of the telecom licence of the Anil Ambani firm — Reliance Communications (Rcom) — over payment default.
It is learnt that a show cause notice would be issued to the company, according to procedure, before moving ahead with the cancellation of licence.
According to an official, clauses under the license agreement empower the government to terminate the licence of the company.
Earlier this month, the company's resolution professional had informed the National Company Law Tribunal (NCLT), Mumbai, that Rcom's insolvency process would be ruined if their licence is cancelled by the telecom department.
In August 2020, DOT had approached the NCLT contending that spectrum should not be a part of the resolution plan for Rcom and its sister concern Reliance Telecom.
The telecom department had filed an affidavit detailing its objections, which said that spectrum cannot be sold under the resolution process.
Rcom has a pan-indian telecom licence and spectrum in the 850-megahertz band in 14 of the 22 telecom circles in the country.
In March 2020, the company's committee of creditors had cleared a resolution plan that would see UV Asset Reconstruction Company (UVARCL) pick up the company’s spectrum for ~12,760 crore, staggered over 12 years, with Rs ~5 crore as upfront cash payment. This was done under the Insolvency and Bankruptcy Code (IBC) proceedings.
Rcom is staring at dues of ~49,054 crore to its lenders and ~25,199 crore in spectrum usage charges and licence fee to DOT, according to government estimates.
UVARCL 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 for these assets.
NCLT is yet to clear the resolution plans for Rcom and Reliance Telecom.
The tower sale under Reliance Infratel to a Reliance Jio unit for nearly ~5,000 crore has been cleared.
As much as ~20,000-23,000 crore is expected from the sale of assets in Rcom and its two units – Reliance Telecom and Reliance Infratel. Besides spectrum, the assets on sale include towers, fibre, enterprise business, data centres, and land.
Lenders’ claims under IBC had totalled over ~57,000 crore. But DOT, as an operational creditor, stands to recover only a fraction of its dues, if and when the asset monetisation takes place under IBC.