RCom Lenders Very Close to Huge Loss

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Reliance Communications, the bankrupt Anil Ambani company, might soon see its telecom license getting cancelled. The Department of Telecommunications (DoT) is set to cancel the telecom license of RCom because the telco has failed to pay the statutory dues. According to a Business Standard report, the bankrupt telco would be served with a show-cause notice before its telecom license is cancelled.

For the unaware, RCom’s telecom license is expiring on July 27, 2021. The DoT is unlikely to renew the license for the bankrupt telco because it is evident that it won’t be able to pay the dues it owes to the government.

RCom Lenders Will Take a Huge Hit if Telecom License Is Cancelled

As per an ET Telecom report earlier this month, the resolution professional of RCom, Deloitte, had told the Bankruptcy Court that if the telecom license of RCom is cancelled, its insolvency process will be majorly affected.

Deloitte had told the National Company Law Tribunal (NCLT) that if RCom’s telecom license is cancelled, the telco will have to surrender its most valuable asset - spectrum. If the spectrum of the telco can’t be transferred or sold, the lenders of the company will take a huge blow since they won’t be able to recover anything.

Without the license, RCom’s entire corporate insolvency resolution process (CIRP) will fall apart. For the unaware, DoT had rejected the RCom’s request of renewing the telecom license for the next 20 years. The telecom department will only go ahead with renewing the telco’s license once it pays off its adjusted gross revenue (AGR) dues amounting to Rs 26,000 crore.

RCom currently holds spectrum in the 850 MHz band in over 14 telecom circles of the country. If the bankrupt telco has to surrender this spectrum on the cancellation of its license, the lenders won’t be able to recover anything. We are only one day away from July 27, 2021, when the telco’s telecom license is expiring.

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