Mumbai, India, May 18, 2018//- Reliance Communications Ltd (RCom) is in talks with Ericsson to reach a settlement outside of bankruptcy court over unpaid service dues, but a deal with the Swedish gearmaker looks unlikely for now, two people aware of the matter said.
The National Company Law Tribunal (NCLT) earlier this week admitted an insolvency plea filed by Ericsson against debt-laden RCom, potentially derailing the Indian telecoms firm’s plans to sell assets to larger rival Reliance Jio Infocomm Ltd to cut debt.
RCom has approached Ericsson, but with a lack of clarity around payment of dues “a settlement currently looks uncertain,” one of the sources familiar with the matter said.
Both sources, who asked not to be named as the discussions are private, said a settlement could be reached if RCom agrees to deposit outstanding dues before Ericsson withdraws its plea.
RCom shares rose almost 30% on Friday on media reports of talks with Ericsson. At 1.13pm, the stock dived 3.32% to Rs16 on BSE.
RCom did not immediately respond to a request for comment, while Ericsson said it does not comment on speculation.
Ericsson, which signed a seven-year deal in 2014 to operate and manage RCom’s nationwide telecoms network, is seeking Rs1,155 crore from the company and two of its subsidiaries.
RCom, controlled by businessman Anil Ambani, late last year announced plans to sell most of its wireless assets to mobile carrier Reliance Jio in a deal sources said was worth about $3.8 billion. Reliance Jio, the telecoms venture of Reliance Industries Ltd, is controlled by India’s richest man and Anil’s elder brother, Mukesh Ambani.
With debt totalling Rs45,733 crore at end-March 2017, RCom is the most-leveraged of all listed telecoms carriers in India.
The order from India’s National Company Law Tribunal (NCLT) allowing Ericsson’s insolvency plea against RCOM means RCom’s sale, or liquidation in case a deal does not work out within a maximum of nine months, will be overseen by a court appointed administrator.
A lawyer for RCom previously told Reuters that the company would appeal the NCLT’s decision at an appellate tribunal.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.
Reuters, livemint.com
