The Indian government has told the country’s top court that bankrupt telcos like Reliance Communications and Aircel cannot sell spectrum as part of any asset monetization plan under the insolvency proceedings.
During the AGR hearings, India’s Solicitor General Tushar Mehta informed the court that spectrum is a national property and it cannot be an asset of the company, and it cannot be sold. He said that the Indian government has already told the National Company Law Tribunal about its stance.
The Department of Telecommunications (DoT) has filed an appeal in the Supreme Court against the sale of the spectrum. The appeal, if accepted, will hamper asset monetization plans of bankrupt telcos RCom and Aircel.
The Supreme Court, however, asked the government to apprise how it plans to recover Adjusted Gross Revenue (AGR) related dues from telcos facing insolvency proceedings. It has also asked the government if is it possible to sell the spectrum or whether it is transferable.
“Please tell us what will happen to the DoT’s AGR related dues, if companies like RCom, Aircel, and Videocon go into insolvency then what would happen to the said amount. Tell us how you will recover Rs 31,000 from RCom and Rs 12,000 crore from Aircel. You have to do something. This is public money,” the court asked Mehta.
The court has asked the DoT to come prepared on its stance in the next hearing which is scheduled for August 14.
The government informed the court that RCom and its units have AGR dues of almost Rs 25,000 crore while Aircel owes Rs 12389 crore.
The court had previously sought details of the ongoing bankruptcy proceedings of RCom, Sistema Shyam Teleservices (SSTL), Aircel and Videocon Telecommunications. These telecom companies are at varying stages of insolvency proceedings.
Aircel’s representative, however, informed the court that the spectrum can be sold as it was mentioned in the terms and condition that it is transferable. Aircel has already made an upfront payment for it. “Since the spectrum is transferable therefore, it can be sold”, he said, adding that Aircel’s stand has been upheld by the National Company Law Tribunal (NCLT).”
The tribunal had last year ruled that the right to use the spectrum belongs to the telco but it didn’t dispute that spectrum is owned by the government. It had then directed the DoT not to suspend the bankrupt telco’s licenses.
Aircel is not going into liquidation as a resolution plan has been approved by the NCLT, the company’s lawyer said. Under the resolution plan, the asset reconstruction firm UVARCL has proposed to buy Aircel’s assets, including the spectrum.
UVARCL is also the shortlisted buyer for RCom assets including spectrum, fiber, and data center. Jio, on the other hand, is expected to buy RCom’s towers in India.
In its resolution plan, UVARCL had informed India’s NCLT that Aircel’s spectrum in 1800 MHz and 2100 MHz bands could fetch Rs 800-1300 crore ($105.26-$ 171.05 million). However, it still needs approval by the Department of Telecommunications (DoT).
Last November, National Company Law Tribunal (NCLT) ruled that Aircel has the “right to use” the spectrum and directed the DoT not to suspend the bankrupt telco’s licenses.
RCom and its subsidiaries including Reliance Infratel and Reliance Telecom is now awaiting NCLT’s approval for its resolution plan.