Bankrupt telco Reliance Communications’ (RCom) ongoing insolvency proceedings have again come into the limelight with India’s Supreme Court questioning why Reliance Jio shouldn’t be held liable to pay AGR dues related to RCom spectrum.
This follows after the State Bank of India (SBI) told the top court that spectrum is an essential part of RCom’s assets and removing spectrum from the proceedings will derail the insolvency process. SBI represents creditors of RCom.
“The resolution applicant whose plan is approved has necessarily taken into consideration the spectrum licence for the resolution of the corporate debtor without which the corporate debtor would be unable to function after being taken over by the resolution applicant,” SBI said in an affidavit to the Supreme Court.
India has already informed the top court that spectrum is a national asset and it cannot be sold under the insolvency process.
During the AGR hearing on Friday, the Supreme Court asked for bankruptcy and spectrum usage details of all insolvent telcos.
Focusing on RCom’s spectrum sharing deal with Mukesh Ambani-led Reliance Jio, the court said that the 4G-only telco “must pay RCom’s AGR dues if it is an actual user of spectrum.”
“Revenue has to be shared. Person using it must pay AGR dues…Spectrum involves public property. Government revenue regime allows sharing,” said the Supreme Court’s three-judge bench, which is headed by Justice Arun Mishra.
Notably, Jio has been the least impacted telecom operator in India when it comes to AGR-related dues since it started operations in 2016 only and has already cleared its own AGR dues of Rs 195 crore.
RCom, on the other hand, owes the Indian government Rs 25,194.58 crore ($3.4 billion) in AGR dues, including those of Sistema Shyam Teleservices (Rs 222.1 crore/$30 million), which was merged with it.
The court has also asked for the agreement details between both RCom and Reliance Jio. Both telcos had entered into a spectrum sharing deal in 2016.
“We have directed them to place on record the information relating to Agreement entered into with respect to using of spectrum by the respective parties. In the case of RCom, its spectrum of 800 MHz is being used by Reliance Jio from 2016,” the Court said in its order on Friday.
Jio currently shares around 38% of total spectrum owned by RCom. Media reports said that Jio is already paying spectrum usage charge (SUC) on this spectrum already.
RCom and its subsidiaries including Reliance Infratel and Reliance Telecom are now awaiting NCLT’s approval for its resolution plan. UVARCL is the shortlisted buyer for RCom assets including spectrum, fibre, and data centre. Jio, on the other hand, is expected to buy RCom’s towers in India.
The court has also asked the country’s Department of Telecommunications to provide all kinds of spectrum agreements between RCom and Jio. It has also sought details of spectrum that is being used by Jio and how much charge or fee is being paid on a yearly basis by the telco.
Bharti Airtel had also bought spectrum from bankrupt telcos Aircel and Videocon in 2300 MHz and 1800 Mhz band using the spectrum trading route in 2016. Airtel also owes Rs 43,780 crore ($5.92 billion) in AGR dues, of which the telco has paid Rs 18,004 crore ($2.4 billion).
The Supreme Court will now hear the matter on August 17.