DoT Urges Aircel to Return Spectrum Against Unpaid Arrears

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The Department of Telecommunications (DoT) has asked the bankrupt telecom operator, Aircel, to return its spectrum to the government as it has not yet paid its arrears for the same, reported an ET Telecom report. This non-payment of the arrears has created a significant roadblock for the operator's bankruptcy process and is starting to hurt the lenders of Aircel. On Monday, the department informed the bankruptcy court that Aircel didn't hold the spectrum in the form of an asset. To this, Aircel responded by saying that it wasn't the case as without the spectrum the entire bankruptcy proceeding would be futile.

Aircel Likely to Suffer Dent if DoT Gets Spectrum

If the government's stand is taken into consideration, then it could mean trouble not only for Aircel but also for another telecom operator undergoing insolvency proceedings – Reliance Communications. The telcos consider the spectrum as their most valuable asset, but if they are said to be not the holders of these spectrum,then they might become a little less attractive for the buyers.

DoT's legal counsel-additional solicitor general Anil Singh said the following to a National Company Law Tribunal (NCLT) bench headed by Justice MK Shrawat, "Spectrum is not an asset of any company. It is only granted for permissive usage and not an asset to be occupied. Today, we have large sums to be recovered, and they continue to use our services without any payments." He further added, "They (telcos) are getting all the benefits while the dues are getting added. The licences are controlled by us and you do not own or purchase spectrum."

The government has kept an aggressive stance against the sale of the spectrum by the insolvent telcos during the bankruptcy proceedings. Aircel currently holds spectrum in the 900 MHz and the 1,800 MHz band and had filed for insolvency in March 2018, after it wasn't able to service a debt of Rs 20,000 crores.

Senior counsel for Aircel Ravi Kadam, said on behalf of the resolution professional, "Spectrum is an intangible asset for the service provider. This is the single asset we have and without this, the corporate insolvency process will fall through." He added, "Licences of spectrum are mortgaged by me to the banks, and if you take it away, what happens to the banks."

NCLT Asks Aircel to Elaborate Resolution Plan

Aircel's plea for an injunction against DoT's application was being heard in the NCLT. DoT had implied that the telco's spectrum should be withdrawn for non-payment of dues. The telco, on the other hand, stood firm on its words saying that the spectrum was worth Rs 11,000 to Rs 20,000 crore and the licenses except for the Tamil Nadu circle will expire only in 2026.

Currently, the telco's plan was to hand over the spectrum to the asset reconstruction company as part of the other assets. The government, on the other hand, has set up a six-member panel to ensure that public resources like spectrum are kept safe in cases where telecom operators have filed for insolvency. Now the NCLT has directed the resolution professional to lay out the plan and tell the provisions made for the DoT. The resolution plan for Aircel will be heard on July 1. Notably, this is not the first time that DoT and Aircel have been on polar ends. In February, the DoT was forced to return Rs 298 crore to Aircel after a Supreme Court order.

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Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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