Home >Companies >News >Aircel files for bankruptcy in fresh telecom sector upheaval

Mumbai/New Delhi: Troubled telecom operator Aircel Ltd filed for bankruptcy Wednesday, the latest episode in India’s telecom consolidation, marked by exits, fire sales and mergers that began with the entry of Reliance Jio Infocomm Ltd.

One of India’s oldest telecom firms, Aircel filed an application at the Mumbai bench of National Company Law Tribunal (NCLT) along with its units, citing high unsustainable debt, price wars, legal and regulatory challenges.

Aircel said in a statement that it filed the application under Section 10 of the Insolvency and Bankruptcy Code (2016) for undertaking corporate insolvency resolution process for Aircel Cellular Ltd, Dishnet Wireless Ltd and Aircel Ltd.

“The board of directors acknowledged that it has been facing troubled times in a highly financially stressed industry, owing to intense competition following the disruptive entry of a new player, legal and regulatory challenges, high level of unsustainable debt and increased losses," it said, adding that these factors caused significant business and reputation impact on the company.

The company said it filed for bankruptcy to find the best possible resolution that would be in the best interests of its vendors, distributors and employees.

Aircel has requested its suppliers and partners for continued services as it strives to provide uninterrupted customer service.

The entry of Reliance Jio Infocomm Ltd in September 2016 with free calls and cheap data upended India’s telecom industry. In response, market leader Bharti Airtel acquired Norwegian telecom operator Telenor’s local arm and broadband service provider Tikona, and Tata group’s mobile business in 2017. Idea Cellular and Vodafone India decided to merge in early 2017. Subsequently, Mukesh Ambani-led Reliance Jio Infocomm acquired the wireless assets of debt-laden Reliance Communications Ltd, bringing down the number of private operators to just three from nine during 2015-16.

The Mumbai bench of NCLT is likely to list the insolvency petition for hearing on 6 March or 8 March, a person aware of the matter said. “Once the NCLT application is filed, there is no guarantee of employees getting salaries but the company will look at securing them," this person added on condition of anonymity.

“If the company goes for liquidation and assets are sold, the Department of Telecommunications’ dues will have to be settled first, followed by payments to bankers and employees, and then to vendors (tower companies and other operators)," this person said.

Hopes started fading for Aircel in October 2017 when Reliance Communications Ltd called off plans to merge its wireless business with it, citing legal and regulatory uncertainties as well as “intervention of vested interests to derail the deal".

Aircel and Dishnet Wireless Ltd, collectively known as the Aircel group, had on 1 December 2017 informed Telecom Regulatory Authority of India (Trai) that they want to surrender licences in Gujarat, Maharashtra, Haryana, Himachal Pradesh, Madhya Pradesh, and Uttar Pradesh (West), following which it shut services in these circles from 31 January.

On 22 February, Aircel informed Trai that it is undergoing deep financial stress and has been severely impacted by tower service provider GTL Infra shutting off as much as a third of its total sites in different circles across the country.

Trai had on 27 February directed Aircel, granting it additional time and porting codes, to enable its customers to shift to other networks.

Aircel has spectrum in the 900MHz, 1800MHz and 2100MHz bands, respectively. According to current rules, Aircel is not entitled to get back a part of its money after surrendering its spectrum to DoT.

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