Anil Ambani led RCom files for bankruptcy!
The Debt level
RCom, controlled by businessman Anil Ambani, owed banks $7 billion as of March 2017 when it last made public its debt level. The company has struggled under heavy debt and reported a string of losses during a price war, triggered by the market entry of Jio Infocomm and the consolidation of telecom industry. The cut-price competition had prompted RCom to reduce operations by shutting down its wireless business but asset sales have not rescued it from bankruptcy.
Road to Insolvency:
India’s Reliance Communications Ltd (RCom) said it will seek fast track resolution through National Company Law Tribunal, the court that deals with bankruptcy cases, to resolve its debt position.
The National Company Law Appellate Tribunal (NCLAT) on Monday allowed telecom gear maker Ericsson India to file its objection by February 8 over Reliance Communications’s plea to proceed with insolvency process.
The tribunal had directed RCom and its subsidiaries to pay ₹550 crore to Ericsson India in 120 days, failing which it will direct insolvency proceedings against the company.
On February 1, RCom had informed that it has decided to opt for insolvency proceedings following its failure to sell assets for paying back its lenders.
RCom shares tumbled by over 48% on Monday after the company decided to go for insolvency proceedings following its failure to sell assets for paying back its lenders.
Whats in for JIO?
RJio, which had a definitive agreement to buy Rcom spectrum, may make all possible attempts to acquire the company’s assets at substantially marked-down price either via presenting a debt resolution plan or in case if the company went into liquidation and auction.
For RJio the deal with RCom is crucial on account of spectrum. RJio had entered into definitive agreement with Rcom to buy its 122.4 MHz of spectrum in the 800, 900, 1800 and 2100 MHz bands, 43,000 towers, 1.78-lakh route km of optical fibre cable network and 248 Media Convergence Nodes. These assets together can contribute significantly to the large-scale roll-out of RJio’s wireless, fibre-to-home and enterprise service.
Question is whether an intra Ambani deal will take place or not ?
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Big update on this case: