Anil Ambani Group’s Reliance Communications Ltd got a big relief today after the Supreme Court ordered the Department of Telecommunications, Government of India to approve the sale of the company’s spectrum lease to Reliance Jio.
“The Spectrum trading transaction will now be completed and RCOM will pay-off Ericsson and minority investors of Reliance Infratel Limited (RITL). RCOM’s asset monetization program thus proceeds as per plans,” the company said.
The deal was announced in December last year, but had got embroiled in red tape at the DoT.
The DoT wanted the company to first clear all its dues before giving its approval.
However, RCom argued that it should be allowed to go ahead with the spectrum transfer to Relaince Jio so that it can raise money and settle all dues, including those of vendors like Ericsson.
The Supreme Court seems to have agreed to RCom’s proposal, and directed that there was no need for a bank guarantee (which would have required RCom to deposit cash in a bank). Instead, the SC asked the DoT to satisfy itself with a corporate guarantee.
RCom is in the process of selling land and other assets in an effort to raise money to settle its dues.
The guarantee will be given by RCOM’s 100 per cent subsidiary, Reliance Realty Ltd, which owns the company’s real estate assets.
The Supreme Court order is in line with an earlier order of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) that no Bank Guarantee was required.
The No-Objection Certificate has to be issued to Reliance Communications Limited within 7 days, the SC said.