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NCLT Reserves Order In RCom Vs DoT Case Over Spectrum Dues

The dedicated bankruptcy court has reserved for order in the legal tussle between telecom department and Reliance Communications (RCom) over spectrum.

Reliance Communications’ (RCom) legal representative reiterated that spectrum is a tangible asset and without it, the asset monetisation to repay lenders would be a failure. However, Department of Telecommunications (DoT) stuck to its point that spectrum belonged to the government and also noted that if a company goes into liquidation later, then, under Insolvency and Bankruptcy Code, spectrum cannot be part of it.

However RCom, now under the reigns of resolution professional (RP) Deloitte, highlighted that the company is still under the corporate insolvency process and not liquidation.

This comes at a time when the Anil Ambani owned telco is in the final leg of the sale of its assets, the most crucial component of which is spectrum, under the ongoing insolvency process.

But that process will come to nought if the DoT takes away the licenses and spectrum. DoT’s argument is that licenses should be cancelled and spectrum that is a national resource needs to be returned to the government, due to non-payment of dues.

The tug of war over spectrum between RCom and DoT has been going on for months now and reached boiling point when the government sent a show cause notice in February seeking clarifications on why airwaves should not be withdrawn when dues were not paid. RCom cited an earlier order by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which had allowed the operator a moratorium from payment till the insolvency process was over.

RCom holds licences for 850 MHz 4G spectrum, which will expire in July 2021 and is its most prized procession. It also has fibre and towers for sale, and any delays in sale will see its value of the assets drop further. Any order in favour of the DoT will hit the asset-sale process, and thus, lenders—financial and operational—who have put in claims worth nearly Rs 90,000 crore.

The RCom-DoT clash mirrors a similar battle between the government and another bankrupt telco, Aircel, which is also undergoing insolvency. Even in that case, DoT has asked the operator to return its airwaves. Deloitte is the RP for Aircel as well and holds the same argument that Aircel’s proposed resolution plan will fall apart if spectrum is taken away.―IBC Guide

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