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RCom faces bankruptcy over fresh Ericsson challenge

RCom faces bankruptcy over fresh Ericsson challenge

Beleaguered Indian operator Reliance Communications has blamed the country’s Department of Telecommunications (DoT) for the renewed legal action that it now faces from Ericsson.

RCom reasons that the DoT’s actions have pushed back the sale of its assets to Reliance Jio, and that this in turn caused it to miss the 30th September deadline to pay Ericsson INR5.5 billion ($75.1 million) as part of a previously agreed legal settlement.

While RCom took this into account and requested a further 60 days to repay Ericsson, the vendor refused to grant this grace period and instead brought a contempt of court petition against RCom’s chairman Anil Ambani via India’s Supreme Court.

The Economic Times noted that since RCom was planning to pay Ericsson using the INR250 billion generated by its asset sale to Jio, it considers the legal action “unwarranted” since the sale has been held up by “factors beyond” the operator’s control – referring to its spat with the DoT over spectrum usage charges.

RCom claims that the DoT “unjustly sought securitisation of alleged demands (which are wholly disputed) for spectrum usage charges amounting to INR2.9 billion. This demand of DoT has been challenged by RCom before the Honourable Telecom Disputes Settlement and Appellate Tribunal.”

Jio agreed to acquire RCom’s assets in January this year, but in March the sale was delayed by India’s Supreme Court after Ericsson claimed that RCom owed it back payments for service fees. This dispute was resolved in August, meaning that the asset sale could proceed and thereby allowing RCom to pay Ericsson its due.

With no date yet confirmed for the next Supreme Court hearing, RCom could face bankruptcy if the court rules against it.

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