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RCom Asked To Pay Infratel Rs 39 Crore For Early Infra Site Exit

An arbitration tribunal has ordered Reliance Communications (RCom) to pay Bharti Infratel Rs 39.22 crore for prematurely exiting the tower sites of the Sunil Mittal-led telecom infrastructure company, a ruling that adds to the financial woes of the Anil Ambani-owned bankrupt telco.

“The claimant is held entitled to a sum of Rs 39,22,48,384…as exit amount from December 12, 2015, along with applicable taxes,” said the arbitration tribunal in its award dated April 13. Bharti Infratel is a claimant and RCom respondent.

The tribunal has also levied an interest amount that the telco has to pay to the infrastructure player. “The claimant shall be entitled to interest on the awarded amount at 9% p.a. from December 12, 2015, till realization,” said the tribunal.

The arbitration tribunal’s decision will be another blow to RCom that faces debt of 46,000 crore and has been fending off many legal battles with its operational creditors, including Bharti Infratel, and the telecom department, among others.

RCom didn’t comment on this specific issue to ET but had previously said it can’t pay off any dues since it is under a payment moratorium due to its ongoing insolvency process.

RCom and Infratel’s relationship started in April 13, 2010, with a master service agreement (MSA) to share infrastructure.

Infratel was to provide RCom 504 cell sites across circles in 2010 and 2015 with expiry terms fixed between 2020 and 2025, respectively.

However, friction started when RCom informed Infratel in December 2, 2015, that it was exiting 456 sites. According to the infrastructure provider, since the operator was exiting the sites before the stipulated period, it had to pay the exit penalty as per their pact.

According to the arbitration tribunal, the Anil Ambani-owned telco, in its defence, said it did not exit the sites voluntarily but was forced to do so because of “unforeseen circumstances that made it impossible for it to continue with the sites.”

The unforeseen circumstances referred to the 2012 Supreme Court verdict on the 2G spectrum case wherein the court quashed 122 telecom licences granted by the then central government to operators.

This was followed by a telecom policy (National Telecom Policy 2012) which delinked licence from the spectrum and introduced a concept where new spectrum could be bought only through auctions. Operators had then approached the government to renew their spectrum licences which were close to expiry, but that didn’t happen.

Reliance Communications said it was one of the telcos affected by this. The telco, now staring at insolvency, told the tribunal that it had done whatever it could to salvage the situation, which included moving the Supreme Court against the government’s refusal to extend licences and even participated in the next round of 2G-3G auctions in 2015 for seven circles.

However, it managed to win spectrum in only two circles in those auctions because of fierce competition. The operator said that because of these circumstances, it should not be made to pay any exit amount on surrendering of sites.―Gadgets Now

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