Telecom Operators Need to Clear AGR Dues Before Transferring Rights of Spectrum Use

The government of India is all set to oppose transfer of the right to use spectrum of bankrupt operators like Reliance Communications and Aircel unless their statutory dues are cleared. The apex court during the hearing of AGR dues matter had also asked whether operators under Insolvency and Bankruptcy Code (IBC) can sell its spectrum to another telecom company. The answer to that question isn’t clear yet. However, ET Telecom in a report provided more insight into the government’s position on the issue. The government is said to believe that until and unless the operators cleared all of its statutory dues (AGR dues in this case), the company doesn’t have the right to sell the spectrum. Speaking to the publication, the government officials have highlighted that the operators such as Reliance Communications and Aircel are first required to clear the dues they owe to the government. It was said that after the clearing of the dues, the operators can then transfer the right to use of spectrum to another telecom operator.

NCLAT to Decide Whether Telcos Can Sell Spectrum Under IBC

In a hearing last week, the Supreme Court had said that it leaves the matter in the hands of NCLAT (National Company law Appellate Tribunal). The Department of Telecommunications (DoT) had said if the insolvent companies are not paying the dues, then under the insolvency proceedings, the parties which buy the spectrum from them will have to pay it. So in this case, for both RCom and Aircel, UV Asset Restructuring Company (UVARCL) will be liable to clear the dues.

The telecom operators earlier in the AGR dues hearing had asked the Supreme Court to see the spectrum as an asset of the company which can be monetised under IBC. If DoT is handed over the spectrum in case the dues can’t be cleared, then DoT may auction it for a higher price.

But the question that arises is, who will buy it?

Another problem that this case is creating for the insolvent companies is faster monetisation of assets. The hearing in NCLAT will decide which way the decision would go. RBI had earlier stalled the plans of UV Asset Reconstruction Company for Aircel. A government official commenting on the same matter said that the final nod for the sale of the spectrum has to come from the government.

It is reported that Aircel owes Rs 14,000 crore and RCom owes Rs 26,000 crore in AGR dues.