Telecom department says Reliance Communications Ltd's (RCom) merger with Aircel would need a no-objection or clearance from the Supreme Court before it approves the deal
Mumbai: The department of telecommunications (DoT) has said that Reliance Communications Ltd’s (RCom) merger with Aircel Ltd would need a no-objection or clearance from the Supreme Court before it approves the deal.
Separately, some of the creditors who had earlier objected to the deal as it was not presented to them before being filed with National Company Law Tribunal (NCLT) have given a conditional consent to the deal.
In an affidavit filed at the NCLT, which was hearing the merger petition of the two telecom companies on Wednesday, DoT said the apex court had restrained Aircel Ltd from selling and trading 2G spectrum allotted to it in 2006 in a 6 January order.
A bench headed by Chief Justice J.S. Khehar in the order also said that it may cancel Aircel’s use of the 2G licences if Malaysian businessman T. Ananda Krishnan of the Maxis Group continued to avoid appearing before Indian courts in a case connected with irregularities in grant of 2G spectrum licenses. Maxis Group, owned by Krishnan, has a 74% stake in Aircel. A special Central Bureau of Investigation (CBI) court has ordered him to appear before it, but he hasn’t complied.
“It is humbly submitted that the petitioners may be directed to take suitable permissions from the Honourable Supreme Court before submission of the proposed scheme of arrangement," DoT said in the affidavit, a copy of which has been reviewed by Mint. An RCom spokesperson declined to comment.
An RCom counsel told NCLT that the firm has already submitted the proposed scheme of arrangement to the Supreme Court and the court has so far not raised any objection or issued observations.
The merger with Aircel is crucial for RCom to reduce debt on its books at a time when new entrant Reliance Jio Infocomm Ltd is squeezing incumbents’ profitability.
RCom plans to sell its tower business to Brookfield Asset Management Inc. for Rs11,000 crore. It plans to spin off its wireless unit and merge it with Aircel Ltd, which will result in Rs14,000 crore getting transferred to the merged entity. This will remove Rs25,000 crore of debt from the books of RCom, which has total debt of around Rs45,000 crore.
In June, its creditors allowed the firm to postpone debt servicing payments till December after it presented this restructuring plan.
Separately, in NCLT, creditors who have given a conditional consent to the deal include State Bank of India, China Development Bank and other Indian banks.
Swedish network provider, Ericsson’s counsel filed an objection to the proposed merger deal, citing dues to the tune of ₹ 1,100 crore recoverable from Aircel. NCLT will continue hearing the petition on Thursday.
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.