Anil Ambani promoted telecom company Reliance Communications on Friday said that it has decided to file for insolvency as its lenders have received zero proceeds from its proposed asset monetization plans even after a period of 18 months.
This comes one month after its planned asset sale to brother Mukesh Ambani’s Reliance Jio failed to get approval from the Department of Telecommunications.
With this, Reliance Communications joins Aircel in the list of telecom companies that have opted for insolvency. Ironically, RCom had planned to merge with Aircel but had to call off the deal citing legal and regulatory uncertainties, as well as intervention of vested interests to derail the deal.
One of India’s oldest telecom firms, Reliance Communications will file an application at the Mumbai bench of National Company Law Tribunal (NCLT) along with its units Reliance Telecom Ltd. and Reliance Infratel Ltd.
“The Board believes this course of action will be in the best interests of all stakeholders, ensuring comprehensive debt resolution in a final, transparent and time bound manner within the prescribed 270 days," the company said in a statement.
Now, the NCLT will appoint an insolvency resolution professional and interested parties will be allowed to bid for Reliance Communication’s spectrum, towers and land. RCom has already completed the sale of its media convergence nodes and related infrastructure assets worth ₹ 2,000 crore, besides selling fibre worth ₹ 3,000 crore to Reliance Jio.
Reliance Communications said that it had to opt for insolvency because of lack of 100% approvals and consensus, as mandated by RBI’s 12th February 2018 circular, on all important issues, amongst over 40 lenders, Indian and foreign despite the passage of 12 months and over 45 meetings, besides the numerous legal issues it faced at various courts.
The proposed sale of RCom’s spectrum assets to Reliance Jio was announced in December 2017 and was initially expected to be cleared by March 2018 to repay lenders. It was stuck in limbo after Jio expressed difficulty in providing an undertaking to the government to settle RCom’s dues till it was protected from RCom’s past liabilities by a bank guarantee. Such an undertaking was mandatory under spectrum trading norms before the government accorded final approval for RCom’s asset sale to Reliance Jio.
In the absence of this undertaking, the department of telecommunications (DoT) last month refused to issue a no-objection certificate for the RCom-Jio deal.
*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.