The Department of Telecommunications (DoT) has told the Supreme Court that it would clear Reliance Communications’ (RCom) spectrum sale to Reliance JioInfocomm by Monday morning, providing a big relief to the Anil Ambani owned telco which can then go ahead with its wireless and real estate asset sale and pay off creditors.
A no-objection certificate from DoT will allow RCom to complete the sale of its airwaves and telecom towers to Jio and real estate to Canada’s Brookfield next week, and use the funds to pay off creditors including Ericsson, said people familiar with the matter.
Ericsson will likely withdraw the insolvency petition it filed against RCom and contempt plea against its chairman Anil Ambani once it is paid ₹550 crore next week, they said. The Swedish telecom equipment supplier had filed the contempt petition after RCom missed a payment deadline as agreed in court.
Ericsson did not respond to ET’s query.
On Friday, shares of RCom closed at ₹15.77, up 2%, on the BSE.
DoT lawyers told the apex court on Friday that the department would complete its due diligence and give the no objection certificate latest by Monday morning.
The due diligence is being done on a corporate guarantee of ₹1,400 crore provided by Reliance Realty, a unit of RCom. The corporate guarantee and a plot of land were provided as security against spectrum-related dues worth ₹2,947.68 crore.
According to RCom’s representative, advocate Mahesh Agarwal, DoT had raised queries on investments made in the form of preferential shares in Reliance Realty by one of the Reliance Group companies.
“DoT said that later on, it should not happen that the investments are taken away. RCom has given an undertaking that those preferential shares will not be redeemed without DoT’s permission,” said Agarwal, who assisted senior counsel Kapil Sibal.
RCom has faced multiple legal challenges in its path to its ₹18,000-crore asset sale efforts for paring down its debt of ₹46,000 crore. The main among those are the battles with DoT and Ericsson.
The fight between Ericsson and RCom started when the Swedish company moved a bankruptcy court alleging that it had not been paid dues of some ₹1,600 crore after signing a seven-year deal in 2014 to operate and manage the telco’s nationwide network.
The strife reached SC and the telco missed its first deadline of repaying its dues and was given an extension till December 15 by the court. The court had also directed RCom to pay Ericsson an additional payment, calculated at 12% per annum of the amount due, for missing the first deadline.
However, since the Anil Ambani owned telco had not received DoT’s approval and the date of payment drew closer, it approached SC again and sought two weeks’ time after getting approval from the government to sell its spectrum to Jio and use the proceeds to pay Ericsson.
SC on Thursday dismissed the petition.
Source: Economic Times