RCom may lost its telecom license if it does not pay up

The Department of Telecomm­unications (DoT) is inching towards cancellation of the telecom licence of the Anil Ambani firm — Reliance Commu­nications (RCom) — over payment default. It is learnt that a show cause notice would be issued to the company, according to procedure, before moving ahead with the cancellation of licence.

According to an official, clauses under the license agreement empower the government to terminate the licence of the company. Earlier this month, the company’s resolution professional had informed the National Company Law Tribunal(NCLT) but that is exactly where the case was for the last two weeks, till they appealed to Delhi HC.

RCom’s fate is close to the wire since if its license is not renewed , its entire asset monetisation plan falls flat , leading to big loss for lenders.

“My license was expiring. I have got a mandatory right under the government guidelines to get a migration,” said senior advocate Mukul Rohatgi, representing RCom. He pointed out to the court that the DoT was seeking operational dues which do not take priority over financial dues. “Operational dues are paid at time of resolution,” he added. The telecom department has pegged dues of at least Rs 26,000 crore against RCom.

Under the IBC proceedings, RCom’s CoC in March 2020 had cleared a resolution plan that would see asset reconstruction firm UVARCL pick up the company’s spectrum for Rs 12,760 crore, staggered over 12 years, with Rs 5 crore of upfront cash payment.

That is a big chunk of the Rs 20,000-23,000 crore expected from the sale of assets in RCom and its two units – Reliance Telecom and Reliance Infratel. Besides spectrum, the assets on sale include towers, fibre, enterprise business, data centres, and land.

Lenders’ claims under IBC had totalled over Rs 57,000 crore. But DoT, as an operational creditor, stands to recover only a fraction of its dues if and when the asset monetisation takes place under IBC.

The resolution plans for RCom and Reliance Telecom are yet to be cleared by NCLT. The tribunal though has cleared the sale of towers under Reliance Infratel to a Reliance Jio unit for nearly Rs5,000 crore, which though hasn’t been implemented yet. Business-Standard