Asset Reconstruction Co. Ltd (UVARCL) is reinitiating talks with potential buyers to sell defunct telco Aircel’s spectrum in the 1800 MHz and 2100 MHz bands. This comes at a time when the Indian government is also planning to hold its spectrum auction before October without the mid-band, which has been selected for 5G services.
The asset reconstruction company, which recently got approval from India’s National Company Law Tribunal (NCLT) on Aircel’s insolvency resolution plan to take over the telco and its two units with a 74% stake. It said that it is expecting robust demand for these airwaves due to the pricing.
In its resolution plan, UVARCL informed India’s NCLT that spectrum in the 1800 MHz and 2100 MHz bands could fetch Rs 800-1300 crore ($105.26-$ 171.05 million). However, it still needs approval from the Department of Telecommunications (DoT).
Aircel has 4G spectrum in the Andhra Pradesh, Delhi, Karnataka, Mumbai, Rajasthan and Tamil Nadu areas. The spectrum license is valid until 2026. It also has nearly 14,500 km of optical fibre network across the country.
According to Ritesh Aggarwal, chief financial officer (CFO) of UVARCL, the company was expected to fetch a higher valuation for its spectrum, but regulatory delays led to depreciation as spectrum comes with a limited validity in the country.
“Spectrum is a commodity that comes with limited validity. So, certainly, there has been a depreciation but the demand for this particular commodity is still high. Of course, the value has eroded because of time but this would not have a significant effect on the pricing as such,” Aggarwal was quoted as saying by the Economic Times.
Aircel had previously told the NCLT that the spectrum was worth Rs 1,100-2,000 crore ($147million-$267 million).
“The spectrum bands are of good quality. Demand should not be a problem for us to find a buyer for this spectrum,” he further added.
The asset reconstruction company, which was set up in 2007, is currently in a process to take approvals from India’s Supreme Court, the Reserve Bank of India and the Department of Telecommunications (DoT) to take over the control of Aircel’s assets from Deloitte, which was the resolution professional (RP).
Reports suggest that the asset reconstruction company is looking to generate Rs 950-1,510 crore ($125 million-$ 198.68 million) through the sale of the spectrum, fibre assets, real estate, towers and equipment in the first tranche of fundraising.
With the nod from NCLT, Aircel’s creditors are now looking to recover their dues of about Rs 2,000 crore-Rs 3,000 crore ($267 million-$400 million), albeit with a massive haircut. The initial plan was to recover Rs 5000 crore -Rs 6000 crore ($667million-$800 million) against Rs 20,000 crore ($2.67 billion).
Aircel owes about Rs 20,000 crore ($2.67 billion) to around 12 financial institutions, including State Bank of India, Bank of Baroda, Punjab National Bank, China Development Bank Corp., and Canara Bank.