“Jio said they would like the agreement to be cleared, but cannot give any such undertaking as asked by DoT.
So it is now up to RCom,” an official in the know of the meeting said.
Neither RCom nor Jio commented on the issue.
The tripartite meeting on Wednesday was held between RCom, Jio, and DoT
to try and reach an agreement over a pending NoC that the telecom ministry had to give for spectrum trading between the two operators. With Jio refusing to budge from its earlier stance, the final outcome of the deal now lies with RCom, which has the option of moving the Supreme Court (SC) to challenge DoT’s stance.
On December 14, DoT had told the apex court that it would issue the NoC to RCom for the spectrum sale within two days, provided the company’s arm, Reliance Realty, did not sell the “preference shares that are reflected in the financial statement of 2017-2018.” RCom had then assured the SC that it would not do so without prior permission from the department.
The government’s nod for spectrum sale was in limbo after Jio wrote a letter to DoT on Friday seeking clarifications and assurances that it would not be held liable for RCom’s dues related to airwaves once its deal with RCom was completed. The condition forced DoT to hold its NoC as the rules state that the government can ask operators to clear dues before it gives a nod.
Earlier DoT had insisted that the RCom furnish bank guarantees worth Rs 30 billion. It had rejected the company’s offer to pledge land to cover the amount. The problem, DoT officials said, with the corporate guarantee backed by land was that it could get into legal tangle, which was not something the government favoured. A bank guarantee would have been easily encashable, they said.
The impasse following the meeting could also mean revival of insolvency against RCom and its arm, Reliance Infratel.
Ericsson India had moved an insolvency petition against RCom, which was accepted by the Mumbai Bench of the National Company Law Tribunal (NCLT). Later, the two companies
reached an agreement in the NCLAT. According to the agreement, RCom would pay Rs 5.5 billion to Ericsson, failing which the latter could revive its insolvency against the telecom company.
RCom had then approached the apex court seeking an extension of the deadline, which was initially September 30 and later changed to December 15. The top court, however, had then made it clear that there would be no extensions beyond that. It had also directed RCom to pay Ericsson interest at the rate of 12 per cent per annum for missing the September 30 deadline.
On Wednesday, RCom told the NCLAT that it had not made the payment to Ericsson and would make the payment after it received NoC from DoT for its spectrum sale to Jio. The matter before the NCLAT was adjourned to January 22. This was done in view of the case pending before the SC.
The NCLAT on Wednesday also asked RCom’s arm Reliance Infratel to file an affidavit within three weeks, giving details about the payments that were due to HSBC Daisy Investments (Mauritius). The company has to make a payment of Rs 2.3 billion to RCom’s minority shareholders of Reliance Infratel, including HSBC Daisy Investments (Mauritius).
Minority investors, including HSBC Daisy Investments (Mauritius), had earlier this year moved the NCLAT opposing the sale of RCom’s tower assets held by Reliance Infratel, alleging “oppression of minority shareholders”. These investors, who together hold nearly 4 per cent, had then opposed the asset sale alleging that the company had not sought their approval for the sale, which amounted to oppression.
HSBC Daisy and RCom had, however, reached an agreement in June, which paved the way for the tower asset sale. As part of its debt reduction efforts, RCom had, in December 2017, signed a Rs 250-billion deal with Jio. The deal included sale of assets mortgaged with different banks to avoid insolvency proceedings. RCom expects to raise Rs 180 billion from the sale of its wireless assets to Jio and real estate assets to Canada’s Brookfield, and pare some of its Rs 460-billion debt.
The story so far
RCom signs Rs 250-billion deal with RJio for sale of tower assets, spectrum
NCLT Mumbai allows RCom, Reliance Infratel insolvency, NCLAT stays the order
RCom reaches settlement with Ericsson, HSBC Daisy, other minority investors
DoT blocks spectrum sale, demands Rs 30 billion bank guarantee for NOC
DoT says can't give NOC as Jio wrote letter saying it would not pay for RCom's past dues
What could happen now
Ericsson could revive the insolvency plea once the Supreme Court reopens in January
RCom could reach a settlement with DoT for the NOC, pay off Ericsson, HSBC Daisy
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.