Final Chance: Pay Ericsson 550 Crores By Dec 15, Anil Ambani's RCom Told
- Supreme Court says RCom will not be granted more time to repay Ericsson
- RCom to pay penal interest of 12% from September 30
- Ericsson alleges RCom wilfully defaulted on payment of Rs 550 crore
Billionaire Anil Ambani-led Reliance Communications (RCom) was on Tuesday granted time till December 15 to repay a sum of Rs 550 crore to Swedish telecom equipment company Ericsson. The Supreme Court, however, said in its order that the debt-ridden telecom company will not be granted any further extension. RCom has been directed to pay a penal interest rate of 12 per cent from September 30. RCom was supposed to pay Rs 550 crore to Ericsson by September 30. The company violated court orders and hasn't met the September 30 deadline, the top court said in Tuesday's order.
The case relates to a petition filed by Ericsson seeking to bar Anil Ambani and two senior executives of his company from leaving the country. Ericsson alleged that Mr Ambani's company had wilfully defaulted on payment of Rs. 550 crore. Ericsson also asked the court not to grant permission to RCom to sell its mobile business assets.
However, in reply, RCom said that it can repay the money only after the Department of Telecom (DoT) approves the sale of its assets. "DoT approval is beyond our control, spectrum sale is stuck on account of DoT nod," RCom said.
A no objection certificate is required from the telecom department for the sale of spectrum, said RCom, adding that it will repay the dues to Ericsson within seven days of approval.
However, Ericsson said that RCom had already received over Rs 5,000 crore from the sale of its assets. "It is raising the bogey to DoT nod to cause delays. RCom is taking the Supreme Court and Ericsson for a ride," the Swedish company said.
At 1:32 pm, the stock of RCom traded nearly flat at Rs 10.89 on the BSE, whose benchmark index Sensex was down 345 points, or 1 per cent, at 33,788, on course to finish lower for a fourth consecutive session.
Ericsson had signed a seven-year deal in 2014 to operate and manage RCom's nationwide telecom network. After RCom failed to pay for its supplies procured from Ericsson, the latter initiated insolvency proceedings against Mr Ambani's companies before the National Company Law Tribunal (NCLT) to recover Rs 1,150 crore. The dues have now risen to Rs 1,600 crore.
RCom had earlier petitioned the Supreme Court to quash insolvency proceedings initiated against it and two other subsidiaries. On the other hand, Ericsson India urged the Supreme Court not to do so till the former paid Rs 500 crore as mutually agreed between them.
RCom owes over Rs. 40,000 crore in debt to a group of 38 lenders, including Chinese banks. In September, the cash-strapped company announced that it will be completely exiting the telecom business to concentrate on real estate in future.
In August it said that it completed the sale of its media convergence nodes (MCNs) and related infrastructure assets worth Rs. 2,000 crore ($285.4 million) to Reliance Jio Infocomm, which is owned by Anil Ambani's brother Mukesh Ambani.
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