RCom says in advanced talks with Ericsson to resolve issues
Reliance Communications, or RCom, is in talks with Ericsson to reach a settlement outside of bankruptcy court over unpaid service dues of Rs1,155 crore
Mumbai: Reliance Communications Ltd (RCom) said it was in advanced talks with Ericsson to resolve “commercial issues”, after two people indicated it was currently uncertain if the firms’ discussions over dues would lead to an out-of-court settlement.
Earlier this week, India’s bankruptcy court admitted a plea by the Swedish telecom gearmaker seeking insolvency resolution against debt-laden Reliance Communications (RCom) over unpaid service dues, potentially derailing the company’s plans to sell assets to larger rival Reliance Jio.
Ericsson, which signed a seven-year deal in 2014 to operate and manage RCom’s nationwide telecoms network, is seeking Rs1,155 crore from RCom and two of its subsidiaries.
“We confirm that RCom and Ericsson are at an advanced stage of discussions to expeditiously resolve commercial issues,” the company said in a securities filing on Friday, adding a resolution would enable it to exit the bankruptcy court process.
RCom is also confident of “expeditiously” proceeding on its asset sale deal agreed with Jio and the overall debt resolution plan agreed with its creditor banks, it said in the statement.
One of the two people who spoke to Reuters earlier on Friday, said RCom had approached Ericsson, but with a lack of clarity around payment of dues “a settlement currently looks uncertain”.
The two, who asked not to be named as the talks are private, said Ericsson could withdraw its plea if an out-of-court understanding is reached.
Ericsson said it does not comment on speculation.
Shares in RCom, controlled by billionaire Anil Ambani, had soared 30% on reports of settlement talks with Ericsson, but reversed gains to trade down 2.7%. The Mumbai market was down 0.7%.
With debt totalling Rs45,733 crore at end-March 2017, RCom is the most-leveraged of all listed telecom carriers in India.
To raise funds, RCom announced plans late last year to sell most of its wireless assets to mobile carrier Reliance Jio infocomm Ltd in a deal said to be worth about $3.8 billion. Reliance Jio, the telecoms venture of Reliance Industries Ltd, is controlled by India’s richest man and Anil’s elder brother, Mukesh Ambani.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.
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