Aircel, a former Indian telecom operator, filed for bankruptcy in 2018, is now looking to monetise its assets other than spectrum. The operator will consider appealing for the same at the dedicated bankruptcy court. Aircel wants to monetise its non-spectrum assets for paying salaries to its employees and maintain assets until the time its legal tussle with the telecom department is over. The company will transfer the money realised from assets sale to an escrow account through which it will pay salaries to around 200 employees and carry out other necessary expenses — more details on the story ahead.
Aircel’s Assets Dip by 50% in Value Because of Regulatory Delays
Aircel is in a tight financial situation. The company has already delayed in paying salaries to its employees, and the regulatory delays are not helping. As per an ET Telecom report, an executive said that even after the court order last year, the monetisation hasn’t happened because of regulatory delays. It has further resulted in a reduction in the value of the company's assets by up to 50%.
The court order being referred to here is the one that came from the National Company Law Tribunal (NCLT) in June 2020. The order gave permission to the UV Asset Reconstruction Company (UVARCL) for purchasing Aircel and its two units for 74% stake. UVARCL then had to pay off around Rs 6,630 crore to the company's financial creditors in the next five years.
However, because of the devaluation of assets by 50%, it means that the creditors will only be able to recover up to 3,000 crores. So what are the regulatory delays that are pushing Aircel to monetise its non-spectrum assets?
Firstly, the appellate court's verdict is awaited on whether a company can sell the spectrum when it hasn’t cleared its statutory dues on it. Secondly, the Reserve Bank of India’s (RBI) decision on whether UVARCL can be involved in the telco’s resolution proposal is awaited.
Aircel holds spectrum in the 1800 MHz and 2100 MHz bands which is its most prized possession as of now. It can help the telco in a large manner to clear out dues. But for that to happen, the government and the telecom department will have to make quick decisions. It will be interesting to see whether Aircel actually moves to the court with this appeal and when it does, what will actually happen.
For the unaware, Aircel declared bankruptcy back in 2018 and had debts over Rs 26,000 crore.