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SC lifts ban on sale of RCom assets in Ericsson case

Update (5th April 2017): The Supreme Court has lifted the stay on the sale of assets by Anil Ambani’s Reliance Communication (RCom). The Court directed that secured lenders can proceed with the asset sales in accordance with law. Swedish company Ericsson had approached the judiciary to recover its dues from RCom. RCom said it will conclude the sales of its spectrum, MCNs and real estate, soon. This means that the company can go ahead with the large asset sale it had earlier announced, wherein its wireless infrastructure will be handed over to Mukesh Ambani-led Reliance Jio in an all-cash deal.

Original story (7th March 2018): Reliance Communication (RCom) has moved the Bombay High Court against an order barring it from selling assets without permission, by an arbitration court. The interim order was passed in a case filed by Swedish company Ericsson.

The Bombay Stock Exchange sought a clarification from RCom in this matter, to which the company responded saying it has “filed an appeal before the Hon’ble Bombay High Court to protect the interests of secured lenders”. The Economic Times has reported that Ericsson too filed a caveat in the Bombay High Court to ensure that its views are heard before the court takes a call.

Ericsson had reportedly moved an Indian arbitration court in September 2017 to recover unpaid dues of nearly Rs 11.55 billion. Ericsson’s Indian subsidiary had signed a deal in 2014 to operate and manage RCom‘s nationwide network for seven years.

The arbitration court’s order has put roadblocks in RCom’s plans to sell its wireless business, as it has earlier announced. Reliance Jio, owned by the Mukesh Ambani, had said in January that it would buy wireless infrastructure assets from RCom in an all-cash deal. This deal, which was set to be completed by March-end, was a big part of RCom’s effort to cut its debt. RCom said that after the purchase Jio will gain over 178,000 kilometres of optic fibre, more than 43,000 cellphone towers and 122.4 MHz of 4G Spectrum in the 800/900/1800/2100 MHz bands.

RCom recorded major losses in previous quarters, but its planned exit from consumer business, which comprised of wireless, direct to home and PCO, helped cut its losses up to 95% in the quarter ended December 30, 2017.

In November 2017, RCom had also agreed to sell its Reliance BIG TV business to Pantel Technologies Pvt. Ltd and Veecon Media and Television Ltd, where Veecom was to take over all of Reliance BIG TV’s contingent liabilities.

RCom has also discontinued its GSM services in eight service areas and CDMA in nine service areas. The company is now allowing customers to generate unique porting codes port out codes on its website, after the Telecom Regulatory Authority of India extended the deadline for porting out of the network to March 31.

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