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RCom requests DoT to renew telecom licence for 20 years

The bankrupt Reliance Communications (RCom) has written to the telecom department to renew its telecom license for another 20 years, a move aimed to retain its rights over spectrum and to keep running its enterprise business.

The Department of Telecommunications (DoT), in response, has asked RCom about its ownership details, government and company officials told ET. The now defunct telecom company, previously owned by Anil Ambani, is currently being run by a resolution professional (RP) Deloitte as part of a bankruptcy process under the Insolvency and Bankruptcy Code (IBC).

“RCom’s license as an operator expires in July and it has approached the DoT for renewal,” said one of officials aware of the developments. “The lenders or RP will now have to figure out who will take the onus of accepting responsibility as the owner. Whosoever accepts ownership will need to respond later to queries around payment of statutory dues.”

While RCom’s consumer mobile phone business shut down in late 2017, it is still running its business for enterprises. It hasn’t paid any of its Rs 26,000 crore adjusted gross revenue (AGR) dues, citing its ongoing bankruptcy proceedings.

“We are bound by confidentiality obligations and are unable to comment on client-specific matters,” Deloitte said.

The telecom department is caught in a bind. The only way it can have any hope of recovering its dues is by way of RCom continuing to be a licensed entity. On the other hand, rules say DoT can terminate licenses for non-payment of statutory dues. And if its license is terminated, RCom will lose the ‘right to use’ over its residual spectrum as well. And if it can’t sell spectrum, its resolution process will fall apart.

RCom owns airwaves in the 850 MHz band in 14 of India’s 22 telecom circles.

But there are more complications to this.

Under RCom’s insolvency process which involves sale of spectrum to asset reconstruction firm UVARCL, DoT, as an operational creditor, won’t recover even a fraction of its claims. This is because operational creditors of RCom and unit Reliance Telecom are getting Rs 672 crore and Rs 88 crore respectively, to be split among hundreds of such creditors, including tower companies and equipment vendors besides the DoT.

DoT has moved court saying RCom’s spectrum can’t be sold under the resolution process unless its dues are cleared. If spectrum is taken away, then RCom’s resolution plan will collapse. The National Company Law Appellate Tribunal (NCLAT), in a separate but similar case, barred another bankrupt telco, Aircel, from selling its spectrum under the resolution process, unless DoT’s dues are cleared.

This ruling has been challenged by Aircel creditors in the Supreme Court and asset buyer UVARCL was expected to move the top court as well.

RCom’s committee of creditors cleared UVARCL to pick up RCom’s spectrum and fibre for Rs 12,760 crore, staggered over 12 years, with Rs 5 crore of upfront cash payment. If it does not manage to do that, then lenders cannot recover a large chunk of Rs 20,000-23,000 crore expected from the sale of RCom and its units.

However, the UVARCL proposal for RCom is yet to be cleared by the National Company Law Tribunal.

While Rcom’s tower unit Reliance Infratel is expected to be picked up by Reliance Jio, it will not get impacted by the DoT decision. “The tower businesses do not need this license as a telco can lease them out. However, the enterprise segment is still running and will be halted if RCom’s license expires,” said another person aware of the latest battle in the resolution process.

At the time of filing for bankruptcy, RCom had debt of Rs 46,000 crore. As many as 53 financial creditors, including local and foreign banks, non-banking finance companies and funds have claimed Rs 57,382 crore, of which Rs 49,224 crore has been accepted by the resolution professional. Gadgetsnow

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