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Department of Telecommunications won’t renew licence until RCom clears dues

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The Department of Telecommunications (DoT) has refused to renew ‘ (RCom) telecom licence unless it clears its statutory dues of ₹26,000 crore. If the bankrupt telco fails to do so it will be forced to surrender its spectrum and its asset sale plan under the insolvency process will get derailed.

“DoT has informed RCom that it cannot renew telecom licences unless previous spectrum related dues are cleared. This followed the resolution professional’s (RP) communication to the department that as per Insolvency and Bankruptcy Code, its dues come under a moratorium and it does not have to pay them,” said an official aware of the developments.

RP may Move TDSAT

RCom had written to the DoT, requesting that its telecom licence be renewed for another 20 years.

RCom owns a pan-India telecom licence and holds airwaves in the 850 MHz band in 14 of India’s 22 telecom circles. Its permits expire in July.

The telco, previously owned by Anil Ambani, is currently being run by its RP, accounting firm Deloitte, as part of an insolvency process under the IBC after it went bust with ₹46,000 crore of debt.

A telecom industry official aware of the matter said that the RP may move the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against the DoT decision.

RCom did not reply to ET’s emailed queries. “We are bound by confidentiality obligations and are unable to comment on client-specific matters,” a Deloitte spokesperson said in an email.

While RCom’s consumer mobile phone business shut down in late 2017, it is still running its business for enterprises. It hasn’t paid any of its ₹26,000 crore adjusted gross revenue (AGR) dues demanded by the DoT, citing its ongoing bankruptcy proceedings.

Under the IBC proceedings, RCom’s committee of creditors in March 2020 cleared a resolution plan that would see asset reconstruction firm UVARCL pick up the company’s spectrum for ₹12,760 crore, staggered over 12 years, with Rs 5 crore of upfront cash payment. That is a big chunk of the ₹20,000-23,000 crore expected from the sale of assets in RCom and its two units – Reliance Telecom and Reliance Infratel. Besides spectrum, the assets on sale include towers, fibre, enterprise business, data centres and land.

Under the plan, DoT, as an operational creditor, won’t recover even a fraction of its claims. This is because operational creditors of RCom and its unit Reliance Telecom are getting ₹ 672 crore and ₹88 crore, respectively, to be split among hundreds of such creditors, including tower companies and equipment vendors, besides the DoT.

“At this rate, the lenders will not recover any value from the spectrum because of the legal battles,” said a third person aware of the correspondence between DoT and RCom.

The National Company Law Appellate Tribunal (NCLAT), in a separate but similar case, had barred another bankrupt telco Aircel from selling its spectrum under the resolution process, unless DoT’s dues are cleared.

This ruling has been challenged by Aircel’s creditors and the buyer of its assets, UVARCL, in the Supreme Court.

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