May 16, 2018

Ericsson's insolvency plea against RCom allowed: NCLT

reliance, ericsson

On May 15, the National Company Law Tribunal (NCLT) admitted an insolvency plea filed by Sweden’s Ericsson against Reliance Communications, potentially delaying the Indian firm’s plans to sell assets to lighten its debt load.

Ericsson, which signed a seven-year deal in 2014 to operate and manage Reliance Communications’ nationwide telecoms network, is seeking 11.55 billion rupees ($170 million) from the company and two of its subsidiaries.

Concerns about the ability of RCom to repay its near $7 billion debt to Indian and foreign banks have been mounting for more than a year.

RCom was aiming to sell its towers, fibre, spectrum and nodes to Jio for about Rs 18,000 crore. According to sources in the courtroom, this case will finally head Supreme Court since neither side will back down.

Moreover, plans to sell most of its wireless assets to Reliance Jio – controlled by the country’s richest man and Anil’s elder brother Mukesh Ambani – in a deal sources said was worth about $3.8 billion are also on the company’s agenda.

Under India’s bankruptcy law, the insolvency resolution needs to be completed within a maximum 9 months, failing which the company is liquidated.

With debt of Rs 45,733 crore ($6.7 billion) at the end of March 2017, RCom is the most-leveraged of all listed telecoms carriers in India.

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