RCom even failed to sell its spectrum to Mukesh Ambani's Reliance Jio, a much anticipated deal that was expected to bring some relief to the troubled company.
Anil Ambani's Reliance Communications has decided to opt for insolvency proceedings following its failure to sell assets for paying back its lenders. Besides, one of the main reasons that forced Anil Ambani's RCom to file for bankruptcy is the price war started by his brother Mukesh Ambani with Reliance Jio.
Moroever, RCom even failed to sell its spectrum to Mukesh Ambani's Reliance Jio, a much anticipated deal that was expected to bring some relief to the troubled company.
Read: RCom to go for insolvency resolution
"RCom board of directors decides upon implementation of debt resolution plans through NCLT framework," the company said.
Reliance Communications (RCom), like other telecom operators, had lost its market share to Mukesh Ambani's Reliance Jio ever since it was launched in 2016. While Reliance Jio's total mobile subscriber base has now reached 28 crore (December 2018 figure), RCom continued to lose subscribers.
RCom is under a debt of Rs 46,000 crore and is facing litigation from telecom equipment making company, Ericsson, for non-payment of dues of Rs 550 crore. The Supreme Court had ordered Anil Ambani-led RCom to pay the dues with interest to Ericsson by December 31. Anil Ambani is also facing a contempt case for non payment of dues despite the court order.
1. Why RCom filed for insolvency?
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The board of directors of RCom Friday reviewed the progress of the company's debt resolution plans since the invocation of strategic debt resolution on June 2, 2017. The Board noted that despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetisation plans, and the overall debt resolution process is yet to make any headway, the statement said.
2. What did RCom plan?
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The company had chalked out plans to sell assets for about Rs 25,000 crore and use it for clearing debt of around 40 lenders.RCom was expecting to realise Rs 975 crore from sale of spectrum to Jio which it promised to use paying dues of Rs 550 crore to Ericsson and Rs 230 crore to settle dues of minority stakeholder Reliance Infratel.
3. Why did not its deal with Reliance Jio pan out?
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Reliance Jio declined to take over any past liability of RCom for which the Department of Telecom may raise demand in future.
