Supreme Court dismisses RCom's plea for more time to pay Ericsson dues

Mumbai: The Supreme Court on Thursday dismissed Reliance Communications’ (RCom) plea for more time to pay Swedish telecom gear maker Ericsson, dealing a big blow to the debt-ridden company, which could now be dragged back into insolvency proceedings.

RCom now needs to pay Ericsson Rs 550 crore by December 15, failing which the insolvency order against the company will be revived, said senior advocate Anil Kher who represented Ericsson. The Swedish firm would then also revive its contempt of court plea against RCom chairman Anil Ambani who has given a personal guarantee for a timely payment to the equipment maker.

“RCom on Thursday prayed for additional time saying that the telecom department is yet to grant the no objection certificate (NOC), which had led to the delays. However, we pointed out that this was the operator’s last opportunity to pay Ericsson and the apex court had in its previous order made it clear that there would be no further extensions,” said Kher.

If payment is not made within the scheduled date , the contempt petition and insolvency order will be listed when court reopens in January after the winter break.

While senior counsels Kapil Sibal and Mukul Rohatgi — also a former attorney general — assisted by advocate Mahesh Agarwal appeared on behalf of RCom, the Swedish company’s legal team included senior advocate Dushyant Dave along with Kher.

If the December 15 deadline is missed, it will be the second time that RCom has not adhered to its payment scheule , the earlier one being September 30-both under SC’s orders.

The telco, weighed under a debt of Rs 46,000 crore, had sought for two weeks’ time after getting approval from the Department of Telecommunications (DoT) to sell its spectrum to Reliance Jio and use the proceeds to pay Ericsson.

In its petition for extended deadline filed on Wednesday, the operator had even asked the apex court to direct the DoT to immediately grant a no-objection certificate to allow the spectrum sale.

Besides Ericsson, RCom also has to clear the dues of its 39 financial lenders, besides operational creditors including minority shareholders of Reliance Inftratel-an RCom subsidiary. But now with the top court’s refusal to grant any leniency to the debt laden telco, insolvency proceedings seem imminent.

RCom is desperately awaiting DoT’s nod for spectrum sale, post which the Anil Ambani owned telco will complete its asset monetisation plan with Reliance Jio Infocomm (Jio) and Canadian asset management firm Brookfield for Rs 18,000 crore.

The company, which was forced to shut its wireless operations late 2017 facing hugh debt, falling revenue and widening losses, has completed the sale of fibre assets and switching nodes to Jio for Rs 5,000 crore, while spectrum and tower assets to the new telecom entrant are still pending and some land parcels need to be sold to Brookfield.

RCom did not respond to ET’s queries. The company's shares closed at Rs 15.46, down by 1.09%, on the BSE on Thursday.

DoT officials had told ET that they will give their nod to the spectrum sale only after due diligence is completed on corporate guarantee worth Rs 1,400 crore furnished by Reliance Realty, a unit of RCom. The corporate guarantee and a plot of land were provided as security against spectrum-related dues worth Rs 2,947.68 crore.