Reliance Communications (RCom) said it has reinstated bank guarantees worth Rs 774 crore with the telecom department ahead of the timeline set by the TDSAT, and asserted that its Rs 25,000 crore asset sale plans are “on track”.
The replenishment of the bank guarantees averts a looming crisis that the company had faced after the telecom department’s show-cause notice to it on the spectrum and license cancellation. It also clears the path for the asset monetization programme of the debt-ridden company.
RCom — which plans to sell spectrum and other telecom assets to Reliance Jio — said in a statement today that overall Rs 25,000-crore asset monetization programme is “fully on track” and will be completed “expeditiously”.
“RCom and its subsidiary Reliance Telecom Limited have today reinstated bank guarantees aggregating Rs 774 crore with the Department of Telecommunications (DoT), four weeks ahead of the last date of September 10, 2018 as granted by Telecom Disputes Settlement and Appellate Tribunal (TDSAT),” RCom said in a statement.
The move will ensure that the company’s license and spectrum value of Rs 11,300 crore “stands fully protected”, the statement said, adding RCom is fully compliant with the stipulated guidelines.
“The company’s asset monetization programme of approx. Rs 25,000 crore for sale of MCNs (media convergence nodes), tower, optic fiber, and the spectrum is fully on track, and will be completed expeditiously,” RCom added.
The first tranche of asset monetization proceeds has been received last week, RCom said without divulging details. RCom had recently got a breather from the telecom tribunal, TDSAT, on the license and spectrum cancellation show-cause notice served by the DoT.
The Anil Ambani-led company had asked the TDSAT to set aside and quash the show-cause notices dated June 19, 2018, and June 22, 2018, and “restrain” the telecom department from terminating or revoking its licenses or spectrum.
RCom had maintained that while DoT has raised a demand for Rs 774 crore on the company, the said payment has already been made to the government through encashment of previous Bank Guarantees. Hence, RCom had argued, it only needed to renew the encashed bank guarantees, which anyway will be payable only in March 2019.
The issue was a crucial one for RCom. It had entered into an agreement with Jio to sell spectrum and other telecom assets, and clear its debt partially. If DoT had indeed canceled the license or revoked spectrum of RCom, the present deal would have been in jeopardy.
Reliance Communications had last week, informed the stock exchanges that the company and Reliance Jio have signed a pact for change in spectrum allotment in 800 MHz bands across 22 circles, as part of the ongoing asset monetization plan.
“Spectrum referred to under this agreement does not include any of the spectrum covered in the Master Agreement entered into between the companies on 28 December 2017,” the company had said.
RCom is currently under the debt resolution process under the Insolvency and Bankruptcy Code, 2016 (IBC).