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RCom moves NCLT demanding status quo on spectrum license from DoT

The National Company Law Tribunal (NCLT) has asked the telecom department to file a reply within next 7 days and asked RP to send a rejoinder within 7 days of receiving the reply.

, ET Bureau|
Updated: Sep 19, 2019, 07.32 PM IST
Deloitte, which is running affairs of RCom, has repeatedly said on many occasions that without spectrum, assets of the telco have no value.
Deloitte, the Resolution Professional (RP) of Reliance Communications (RCom), has moved bankruptcy court, seeking a direction to the telecom department to not terminate licenses of the bankrupt telco, and take back spectrum.

This comes at a time when the Anil Ambani-owned telco is in the final leg of the sale of its assets, the most crucial component of which is spectrum, under the ongoing insolvency process. But that process will come to nought if the Department of Telecommunications (DoT) takes away the licenses and spectrum. But DoT’s argument is licenses should be cancelled and spectrum that is a national resource and needs to be returned to the government, due to non-payment of dues.

RP, represented by senior advocate Ravi Kadam, told the bench that the applications were filed to protect the spectrum, which is the most valuable asset for the operator. “If termination goes through, there will be no assets left,” said Kadam on Thursday. However, assistant solicitor general (ASG) Ashish Mehta, representing DoT, said there was no fresh termination or show cause notice sent to the operator.

The National Company Law Tribunal (NCLT) directed DoT to send its reply to RP’s applications in the next seven days, while RP handling RCom’s affairs will file its rejoinder within seven days of receiving the reply. The matter will be heard on September 30. tug of war over spectrum between RCom and DoT has been going on for months now and reached boiling point when the government sent a show cause notice in February seeking clarifications on why airwaves should not be withdrawn when dues were not paid. RCom cited an earlier order by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which had allowed the operator a moratorium from payment till the insolvency process was over.

The matter went up to the appellate tribunal in March, which stayed the DoT’s show cause notice.

RCom holds the licences for 850 MHz 4G spectrum, which will expire in July 2021 and is its most prized procession. It also has fibre and towers for sale, and any delays in sale will see its value of the assets drop further. Any order in favour of the DoT will hit the asset-sale process, and thus, lenders—financial and operational—who have put in claims worth nearly Rs 90,000 crore.

The RCom-DoT clash mirrors a similar battle between the government and another bankrupt telco, Aircel, which is also undergoing insolvency. Even in that case, DoT has asked the operator to return its airwaves. Deloitte is the RP for Aircel as well and holds the same argument that Aircel’s proposed resolution plan will fall apart if spectrum is taken away.

RP had earlier informed the bankruptcy court that Aircel’s spectrum was worth Rs 11,000-20,000 crore and that the licences, except for the Tamil Nadu circle, will expire only in 2026.

Although Aircel’s resolution plan has been approved by its Committee of Creditors (CoC), its fate is hinging on NCLT’s verdict on spectrum.

To complicate matters for the telco, Indus Towers recently moved NCLT against the RP for wrongful rejection of its claims. It has also challenged the resolution plan approved by the CoC. According to sources, Aircel used 10,000 sites of Indus Towers while in operations, a person aware of the petition said, adding that that the tower company’s grouse is that while they had filed claims of about Rs 1,200 crore, the RP had admitted a much lesser amount.

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DoT starts issuing telecom equipment test certificates

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