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Ericsson CEO Says Pursuit Of Reliance Communications Dues Sent Strong Message

Ericsson’s successful legal action against Reliance Communications (RCom) over unpaid bills showed the Swedish gear maker’s determination to ensure that service providers get what’s due to them.

“We were sending a strong message that if we are providing services, we should get paid,” CEO Börje Ekholm said. “If we just fold over, it has implications for others that maybe we don’t need to pay these guys because they will not do anything anyway. We are satisfied that Indian courts look at it this way as well.”

On February 20, India’s Supreme Court upheld a contempt petition filed by Ericsson against RCom chairman Anil Ambani for not paying the Swedish company, despite having the money to do so. The court threatened to send the businessman to jail for three months if he didn’t cough up what was owed in four weeks.

Ekholm however said it wasn’t time to break out the “champagne” as it hasn’t received the remaining Rs453 crore from the Indian telco. He told that he had “never been through anything like it.”

Ericsson has already got the Rs118 crore that RCom had previously deposited with the top court. Since the amount to be paid has been calculated at Rs 571 crore, along with interest, the amount due in four weeks is Rs 453 crore. RCom has said it will abide by the ruling. Its operational creditor Ericsson had filed three contempt pleas to press for its dues.

At the heart of the dispute was Ericsson’s seven-year deal signed in 2014 to operate and manage RCom’s nationwide telecom network. Ericsson annulled the deal in 2017 after it wasn’t paid and moved the bankruptcy court to claim dues of more than Rs 1,500 crore.

Ekholm is upbeat on data-guzzling India where the telecom industry is stabilizing after a period of rapid consolidation, which has shrunk the number of non-state operators to three – Reliance Jio, Bharti Airtel and Vodafone Idea–from eight to nine about two years back.

“We are seeing good opportunities because ultimately demand for our equipment will be driven by traffic and that has not changed. For us, if we can be competitive in India, we can be competitive elsewhere,” the executive said. “The Indian market is very competitive but also one with the highest data consumption… This puts requirements on us as vendors to make sure we provide cost-efficient equipment, otherwise costs become very high.”

He added that Ericsson will be investing in India to expand its local manufacturing and make the country an export hub. He said high prices for 5G airwaves will hurt investment in the technology as it would eat into the capital left with telcos, backing the view of Bharti Airtel, Reliance Jio and Vodafone Idea.

“The problem with high price is it crowds out the investment. So, if you start to get too high on spectrum price, there is less capital to build the network–it’s a conundrum,” Ekholm said. “I think sometimes, governments don’t factor in the societal benefit of increasing mobile broadband penetration. That should be factored in when you think about spectrum prices.”—Gadgets Now

 

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