Published: Thu, May 17, 2018
Markets | By Otis Pena

NCLT admits petition by Ericsson against RCom

NCLT admits petition by Ericsson against RCom

Ericsson has sought Rs1,154 crore from Reliance Communications (RCom) and two of its arms-Reliance Telecom Ltd and Reliance Infratel Ltd-after having signed a seven-year deal in 2014 to operate and manage the telecom firm's nationwide network.

The tribunal admitted the petition on May 15 which could potentially result in delaying RCom's plans to sell assets to lighten its debt load.

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 in a press release said it would decide the next course of action after studying the detailed orders of NCLT.

RCom owes around Rs 45,000 crore to as many as 31 domestic and global banks, including over Rs 10,000 crore to a Chinese lender.

Billionaire Mukesh Ambani's prospects for bailing out his younger brother's phone company are fading after an Indian tribunal put his sibling's Reliance Communications Ltd. into insolvency proceedings, which prohibit "connected persons" from acquiring assets of delinquent borrowers.

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Under India's bankruptcy law, insolvency resolution needs to be completed within a maximum 9 months, failing which the company is liquidated. Last year, courtroom battles were one of the main reasons its merger deal with Aircel and the tower sale to Brookfield did not go through.

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.

After falling as much as 18 percent in the previous trading session, shares of Reliance Communications rose 8.5 percent in the early trade on Thursday as investors hoped for a positive outcome from the company's likely appeal to NCLAT (National Company Law Appellate Tribunal) against NCLT (National Company Law Tribunal) order.

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