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DoT Forms Committee To Examine Issues Arising Out Of Telcos Insolvency

In a first, the Department of Telecommunications (DoT) has constituted an ‘Insolvency Issues Committee’ to examine how it can protect its interest in cases where telecom operators are undergoing insolvency proceedings.

The moves come as two operators – Aircel and Reliance Communications (RCom) – are undergoing bankruptcy proceedings.

As per rules under the Insolvency and Bankruptcy Code (IBC) rules, DoT is an operational creditor when telecom companies initiate Corporate Insolvency Resolution Process (CIRP).

However, there is a view within DoT that spectrum being a natural resource may be seen outside the purview of the insolvency rules.

The committee, constituted by the DoT secretary, will also look into the legal position of resources (spectrum) and recovery of dues as a creditor.

It will also explore the precautions and measures to safeguard spectrum from being “unproductive” or disposed at cheap prices following the resolution process, sources close to the development told BusinessLine.

Default on payments

The licensor had staked a claim of Rs. 6567 crore in the case of Aircel, which had filed for initiating CIRP before the National Company Law Tribunal (NCLT).

However, the Interim Resolution Professional (IRP) had moved the NCLT with a plea to direct DoT to refrain from terminating the group’s licence and invoking the spectrum.

RCom had missed paying two installments of spectrum payment (Rs. 21 crore in March and 281 crore in April).

However, with the beleaguered telecom operator’s bankruptcy petition being heard before the National Company Law Appellate Tribunal (NCLAT), DoT is yet to cancel its licence or spectrum, they added.

Under the terms of the Notice Inviting Application (NIA) document of spectrum auction, DoT need not refund spectrum money in case of revocation or cancellation of the radio waves. Further, it has the right to invoke bank guarantees to recover the dues.

In case of default in payment of installments of spectrum payment, DoT will also terminate the licence and spectrum allotment, with the assigned spectrum being taken back. The bank guarantees would be encashed.

The new committee’s role is also to protect spectrum. Airwaves have to be controlled and regulated by a public authority to prevent its misuse, which would also be the mandate of the internal issues committee.―The Hindu Business Line

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