The move by troubled Indian company Reliance Communications to exit the telecom business by selling its assets to Reliance Jio Infocomm is not going according to plan and has run into roadblocks.
RCom, owned by business magnate Anil Ambani, and Reliance Jio Infocomm, owned by his brother Mukesh Ambani, have decided to extend the validity of the agreements signed by the two firms relating to sale of assets until June 28, The Financial Express reports.
The two companies on December 28, 2017, signed an agreement regarding the sale of RCom’s towers, fiber assets, media convergence nodes (MCN) and spectrum.
The extension comes after the Indian Department of Telecommunications (DoT) reportedly made it clear that it will not sanction the deal until there is clarity on the payment of dues relating to spectrum and other charges recoverable from RCom.
Earlier after a Supreme Court order, RCom provided a corporate guarantee of 14 billion rupees (US$20.08 million) to the DoT against the company’s spectrum dues of 29 billion rupees.
However, Reliance Jio reportedly told the DoT that it would not take any liability of RCom’s debt. The department has maintained that since Reliance Jio is not ready to take this liability, it cannot let the deal go through.
RCom has a total debt of around 460 billion rupees. As of now, the sale of fiber-optic assets and MCNs has been completed, with Jio paying 50 billion rupees in total to RCom.
Earlier the company had missed its December 15 deadline to pay Swedish telecom company Ericsson 5.5 billion rupees, as promised to the Supreme Court. Ericsson was managing RCom’s mobile-phone network in India.
RCom had to close its voice business in November 2017 because of mounting losses. Anil Ambani later struck a deal with Mukesh to sell RCom’s assets to pare its debts.