DoT Moves Legally To Ensure That Spectrum Held By Bankrupt Telecom Firms Is Not Sold During Insolvency Resolution
[ By Bobby Anthony ]The Government of India’s Department of Telecom (DoT) is in the process of seeking expert legal opinion and may even consider moving the Supreme Court if necessary to ensure that radio spectrum held by bankrupt telecom companies are not sold during their insolvency resolution process.DoT’s stand is that radio spectrum belongs to the government and does not come under...
The Government of India’s Department of Telecom (DoT) is in the process of seeking expert legal opinion and may even consider moving the Supreme Court if necessary to ensure that radio spectrum held by bankrupt telecom companies are not sold during their insolvency resolution process.
DoT’s stand is that radio spectrum belongs to the government and does not come under the definition of private property of any telecom company.
In fact, the DoT will state its position at the ongoing hearings of the Aircel bankruptcy process at the National Company Law Tribunal (NCLT) that the government is the licensor of airwaves and hence it is the only entity authorized to sell it through auctions, according to the existing law.
DoT will reiterate that radio spectrum or airwaves is a finite as well as sovereign asset which belongs to the government alone and hence the government is the sole authority responsible for allocating it as well.
DoT is also examining if this particular category of transaction can be removed from insolvency and bankruptcy code related proceedings.
It is concerned that if the spectrum is sold by the resolution professional under the Insolvency and Bankruptcy Code 2016, its value will be far less than the market price of airwaves.
Besides the reduced price, the proceeds of any such sale would first accrue to banks and other financial lenders, ensuring that operational creditors like the DoT would be placed way down the priority list in terms of getting paid.
In case the NCLT rules that spectrum could be sold by the resolution professional managing bankrupt telecom companies, the government is exploring the possibility of moving the Supreme Court.
All these movies are expected to affect the insolvency, bankruptcy and revival proceedings of defunct telecom companies like Aircel and Reliance Communications, since without the spectrum, these companies would hardly be of any value to any potential buyers.
The NCLT will hear the Aircel matter on June 10, while the next hearing of Reliance Communications has been scheduled for June 21.