DoT Urges Aircel to Return Spectrum Against Unpaid Arrears

The 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

Highlights
  • Aircel's plea for an injunction against DoT's application was being heard in the NCLT
  • The resolution plan for Aircel will be next heard on July 1

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.

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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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Kaushik IMANikhil Mumbai-PuneBiswadeep,KolkataThamilan daaKunal Recent comment authors
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Nikhil Mumbai-Pune
Nikhil Mumbai-Pune

Everything from Aircel/RCom will be put into auction most probably. That’s why auction is kept a little bit late than usual. DoT wants to reduce the load on Jio as fast as possible which is not good sign in my opinion. Airtel and Vodafone-Idea are still expanding quiet a slow. Airtel is remaining with band 8 and band 1. Vodafone-Idea has just started their 4G deployment. Will take a quiet lot of time. Both Airtel and Vodafone-Idea won’t buy much from this auction. Only Jio will buy band 28( due to problems of RCom and eventually of band 5)and band… Read more »

Kunal
Kunal

Off topic- Jio inching closer to sell stake in Jio towers to Brookfield. Deal may get completed by August 2019. Jio has over 170000 towers & a valuation of around 36000 crores. At the moment Jio is the only tenant on these towers , which will be opened up for other tenants, once deal is completed. With addition of extra tenant , Jio will be eligible for discount on rent. Mukesh Ambani may also buy some stake in the tower firm in personal capacity. Deal will help reduce debt of Jio. It’s a safe buy for Brookfield as rentals per… Read more »

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Kaushik IMA
Kaushik IMA

So, RCOM towers taken over by Jio, Brookfield deal fails –> But now same Brookfield will buy the same towers (+Jio’s own) from Jio? 😀

Mukeshbhai, well played!

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