Tribunal Admits Ericsson's Insolvency Plea Against Reliance Communications
Mumbai: The National Company Law Tribunal (NCLT) on Tuesday admitted an insolvency plea filed by Sweden's Ericsson against Reliance Communications, potentially delaying the Indian firm's plans to sell assets to lighten its debt load. Ericsson, which signed a seven-year deal in 2014 to operate and manage Reliance Communications' nationwide telecoms network, is seeking Rs 1,155 crore ($170 million) from the company and two of its subsidiaries.
Worries about the ability of RCom, as the company is widely known, to repay its near $7 billion debt to Indian and foreign banks have been mounting for more than a year. Like other incumbents in the country's telecoms sector, RCom has been hit by a fierce price war over the last year, especially after the entry of Reliance Jio, which offered free voice and cut-price data plans.
Run by wealthy businessman Anil Ambani, RCom has said it plans to reduce its debt by selling assets such as airwaves, mobile masts and fibre optic investments.
The company also plans to sell most of its wireless assets to Reliance Jio - controlled by the country's richest man and Anil's elder brother Mukesh Ambani - in a deal sources said was worth about $3.8 billion.
However, Tuesday's order from the NCLT means that the asset sale would now be overseen by a court-appointed administrator.
A lawyer for RCom said it would appeal. The company in a press release said it would decide the next course of action after studying the detailed orders of NCLT.
Under India's bankruptcy law, insolvency resolution needs to be completed within a maximum 9 months, failing which the company is liquidated. With debt of Rs 45,733 crore ($6.7 billion) at the end of March 2017, RCom is the most-leveraged of all listed telecoms carriers in India. The company shut down its consumer mobile business late last year.
RCom's asset sale plan has also stalled as it faces a separate legal challenge after HSBC Daisy Investments (Mauritius) Ltd filed a petition accusing the company of oppression of minority shareholders and operational mismanagement.
RCom shares closed down 8.2 per cent on Tuesday in a broader Mumbai market that ended largely unchanged. The company is set to report earning for the quarter ended March on May 19.
-
Unhedged Position: Can India See An Indonesia-Style Time Correction?
The Nifty is trading below levels it first clocked in 2024. Is there, then, as I have suggested in the headline, potential that the current time correction drags on painfully for the next three-five, even ten years?
-
Navigating Friction And Energy Realities: An Analysis Of Marco Rubio's October Visit To India
Occurring at a critical juncture marked by stalled trade negotiations and escalating geopolitical pressures over global energy supplies, the visit offers a profound window into modern US-India relations.
-
India Exports Capital. Why Not Export Trusteeship?
The big question, then, is whether India can build an institution that global borrowers, investors, banks, and lawyers can trust, even without an Indian connection.
-
France's Economy & Politics Are In Crisis | The Reason Why
Let's look at how the French economy and politics evolved under Nicolas Sarkozy, Franois Hollande and Emmanuel Macron.
-
You May Inherit The Business. You Must Earn Its Credibility.
Succession tests the founder's ability to share authority as much as it tests the next generation's readiness to assume it.
-
Signing Deals Is One Thing; Making Them Work Is Another | The Week In Whys
Sometimes, things don't turn out as planned. Indian companies have lost some bids to rivals, some projects won't produce until 2030.
-
FOMC Wall, PERM Suspension, Hospital Stocks | Talking Points This Week
A PERM suspension would directly affect green-card sponsorship rather than H-1B visas, so the near-term earnings impact could remain relatively limited. The key question is whether this marks a new phase in US scrutiny of Indian IT.
-
Everything, Everywhere, All At Once: Dalal Street's Week To Forget | Joining The Dots
Visa curbs, a Starlink spat and cancer drug caps: what connects this week's shocks for Indian markets
-
India Is Going Abroad For Critical Minerals. But It May Take Years To Pay Off | The Reason Why
Although India's steps are in the right direction, they remain modest compared with India's growing dependence.
-
When Everyone Has AI, What Gives You An Edge?
India's young workforce is entering an uncertain world of work where powerful AI tools are becoming widely accessible. The advantage will belong to those who combine deep expertise with digital fluency, and the distinctly human capabilities that technology cannot manufacture.
