RCom slumps after NCLT admits Ericsson's plea

Mindy Sparks
May 17, 2018

Under the resolution plan worked out with the domestic lenders the company was to sell of most of its wireless assets to Reliance Jio, controlled by Anil Ambani's elder brother Mukesh Ambani for an undisclosed value.

According to reports, the Mumbai bench of the National Company Law Tribunal on Tuesday, 15 May 2018, admitted three petitions filed against Reliance Communications (RCom) and its subsidiaries by Swedish telecom equipment maker Ericsson under the Insolvency and Bankruptcy Code.

The stock fell sharply by 15.26 per cent to end at Rs 10.55 on BSE.

Shares of Reliance Communications plunged almost 16 per cent a day after NCLT admitted an insolvency petition filed by Ericsson against the company and two of its subsidiaries.

Ericsson had signed a seven-year deal in 2014 to operate and manage RCom's nationwide telecom network but has not been paid the bill.

SHARES and bonds of Reliance Communications Ltd tumbled after an Indian tribunal ordered that the wireless carrier be placed in insolvency proceedings, jeopardising its proposed US$3.7 billion asset sale to Reliance Jio Infocomm Ltd. The apex court had earlier has allowed the sale of the tower and fibre business, but insisted that the proceeds be escrowed, while allowing the spectrum, fibre, media convergence network (MCN) assets and real estate to be sold off.

RCom owes around Rs 45,000 crore to a consortium of 28 banks led by State Bank of India.

A lawyer for RCom said it would appeal. Ericsson India will inform the tribunal on the appointment of insolvency resolution professional on Wednesday. The company in a press release said it would decide the next course of action after studying the detailed orders of NCLT.

Jio has tower, fibre and airwaves sharing pacts with RCom and could suffer some loss of competitiveness if a rival were to secure the beleaguered operators' assets.

The company shut down its consumer mobile business late a year ago.

Other reports by Iphone Fresh

Discuss This Article