On Tuesday, the National Company Law Tribunal (NCLT) confronted an insolvency plea filed by Sweden’s Ericsson against Reliance Communications, potentially delaying the Indian firm’s plans to sell its assets to lighten its debt load. A seven-year deal which was signed in the year 2014 by Ericsson to operate and manage Reliance Communications’ nationwide telecoms network, will be seeking $170 million from the company and two of its subsidiaries.
Worries about the ability of RCom, as the company is widely known, to repay its near $7 billion debt to Indian and foreign banks have been mounting for more than a year. Like other incumbents in the country’s telecoms sector, RCom has been hit by a fierce price war over the last year, especially after the entry of Reliance Jio, which offered free voice and cut-price data plans.
Anil Ambani one of the wealthiest man and owner of RCom has stated that it ideas to reduce its debt by selling assets such as airwaves, mobile masts, and fiber optic investments.
In one of the deals, the sources said the company has also made several plans to sell most of its wireless assets to Reliance Jio which is handled by the country’s richest man and Anil’s elder brother Mukesh Ambani which will be worth about $3.8 billion.
However, Tuesday’s order from the NCLT clearly indicates that the asset sale would now be overseen by a court-appointed administrator. A lawyer for RCom made a statement that it would appeal. The company in a press release also stated that it would decide the next course of action after studying the detailed orders of NCLT.