RCom to File for Insolvency

RCom once challenged for market leadership in the Indian telecom sector. Now it is seeking bankruptcy protection.

Gagandeep Kaur, Contributing Editor

February 4, 2019

2 Min Read
RCom to File for Insolvency

Owned by Indian billionaire Anil Ambani, and a one-time giant of the Indian telco market, Reliance Communications has informed the stock exchange that it will commence bankruptcy proceedings through the National Company Law Tribunal (NCLT) after failing to conclude a spectrum deal with Reliance Jio, a rival operator controled by Anil's brother Mukesh. (See India's RCom in Distress as Jio Backs Away From Spectrum Deal.)

The filing seems like a bleak final chapter in the story of an operator that once challenged for market leadership, and points to the turmoil that has engulfed the entire Indian telecom sector in the last two years.

"Despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetization plans, and the overall debt resolution process is yet to make any headway," said Reliance Communications Ltd. in a statement. "Accordingly, the board decided that the company will seek fast track resolution through NCLT. The board believes this course of action will be in the best interests of all stakeholders, ensuring comprehensive debt resolution in a final, transparent and time-bound manner within the prescribed 270 days."

Once the insolvency proceedings start, RCom will not be able to resurrect plans for a 9.75 billion Indian rupees ($135 million) sale to Reliance Jio of 122.4MHz of spectrum. That deal would have allowed RCom to clear a part of its INR460 billion ($6.4 billion) in debt, but RJio's apparent refusal to assume liability for RCom's loans caused the deal to fall apart.

For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading.

RCom has faced rough weather for several years. Historically, its decision to use CDMA as opposed to the more popular GSM standard looks like a mistake, and the transition to GSM-based technology proved costly. With debts rising and margins under pressure, it struck a deal with RJio covering the provision of 4G services, but that tie-up was not enough to keep it afloat.

Indeed, RJio's arrival in the market in September 2016 was the final blow for RCom, along with several other struggling Indian telcos. With profits in freefall, a spate of M&A activity led to the disappearance of companies such as Telenor, Videocon and Tata Teleservices. Unable to find a partner or buyer, RCom was ultimately left with no choice but to file for bankruptcy.

— Gagandeep Kaur, contributing editor, special to Light Reading

Read more about:


About the Author(s)

Gagandeep Kaur

Contributing Editor

With more than a decade of experience, Gagandeep Kaur Sodhi has worked for the most prominent Indian communications industry publications including Dataquest, Business Standard, The Times of India, and Voice&Data, as well as for Light Reading. Delhi-based Kaur, who has knowledge of and covers a broad range of telecom industry developments, regularly interacts with the senior management of companies in India's telecom sector and has been directly responsible for delegate and speaker acquisition for prominent events such as Mobile Broadband Summit, 4G World India, and Next Generation Packet Transport Network.

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like