Reliance Communications has blamed delays due to “vested interests” of companies such as Bharti Infratel and GTL InfrastructureBSE -0.96 %’s Chennai Network Infrastructure among key reasons for the collapse of its proposed merger with Aircel. The Anil Ambani-owned telco has started negotiations with lenders on its alternative debt reduction plan which do not require the multiple clearances, its executive director Punit Garg told ET in an interview. Edited excerpts:
What made you call off the merger with Aircel?
The decision has been taken mutually. We filed for approval in the NCLT (National Company Law Tribunal), but there were vested interests such as companies like Bharti Infratel, CNIL (a unit GTL Infrastructure). As tower companies they would have benefited from the merger, but they decided to oppose and now it would hurt them. They would have dealt with a much stronger and bigger company, but now they would be where they are. Given the financial stress in telecom…( and) restrictions on the bank financing…general atmosphere was negative.
Then, DoT (telecom department) had submitted affidavit in NCLT to seek clarification on merger with Aircel from Supreme Court, given that SC had put stay/restrictions on selling trading of Aircel’s spectrum. So, they wanted clarity on that, and, for us, it was getting out of time because we needed to get it done quickly enough. Unsecured creditors then also filed objections before NCLT. All these factors delayed the deal by three months. When we announced SDR (strategic debt restructuring) plan in June, we did not anticipate the delay. Both parties sat together quietly and decided to choose our own course.
What is the next step for RCom as it tries to adhere to the standstill agreement with lenders?
We announced our plan that we will continue monetising our towers, fibre network, real estate. In addition, we will be optimising the spectrum portfolio. These would generate proceeds over .`25,000 crore and for these, we do not need court, Department of Telecom approvals or clarification from the Supreme Court. So, we will do the deals in a time frame that will be determined and reduce debt as was envisaged earlier. RCom would continue to focus on 4G strategy on the current spectrum sharing, ICR arrangement with Jio, and…our profitable B2B segment which includes global and India enterprise, data centre business and global submarine cable network.
Are you looking to sell or trade spectrum?
We will be a 4G spectrum company and the spectrum that does not fall under the gambit of 4G, we will use as part of optimisation plan and do whatever required under sharing and trading guideline of DoT.
How confident are you of lenders backing your alternate deleveraging plans?
The plan published on Sunday was done after consulting with lenders.
What is the fate of your tower unit stake sale to Brookfield?
We are in deep discussions with Brookfield, but now the Aircel angle is not there because of which the value will be different. Deal is certainly on.
What is the status of the case of insolvency that Ericsson has filed claiming their dues?Do you see any out-of-court settlement possibility?
Our lawyers are fully prepared for the case that will come up on October 6. We will come to know of their strategy whether they are fighting or withdrawing the case. You can never rule out anything. Conversation is on between the two companies and let us see how it progresses.
Is there any chance of RCom and Aircel reviving deal talks?
Any combination is possible. Both parties have exhausted, become impatient because of delays for reasons beyond either of our control. At this moment, we need to move on and focus on plans to ensure our companies are profitable and do whatever required to satisfy lenders.
How do you expect government policies to change to help mergers to go through?
Going by our SSTL (Sistema Shyam TeleServices Ltd) merger, a major hindrance was a shareholder who held up the process for 22 months… Window of 45/60/90 days may ultimately speed up M&As, but it would need lot of small steps. NTP (New Telecom Policy) will make it swifter and a smoother process.
