The Supreme Court has paved way for Reliance Communications Ltd to sell its assets to Reliance Jio Infocomm Ltd. The highest court on Friday cleared a settlement between RCom and the Indian unit of Swedish telecom equipment maker Ericsson AB that makes it easier for the sale of telecom operator’s assets.
According to Mint, the judgement regarding the sale of assets was delivered by a two-judge bench headed by justice R.F. Nariman. The bench direct Reliance Communications to pay Rs 550 crore to Ericsson by October 1 and has asked RCom chairman Anil Ambani to give an undertaking to this effect. On October 1, the apex court will also hear RCom’s plea to close the insolvency case. Bloomberg reports that Ericsson has objected to the settlement terms of the insolvency case.
In 2014, Ericsson had signed a seven-year deal with RCom to operate and manage its nationwide telecom network. The Indian arm of the Swedish telecom operator has alleged that it has not been paid over Rs 1,000 crore. It has earlier claimed outstanding dues of Rs 16,000 crore but settled for Rs 550 crore. The sale of Reliance Communications’ telecom assets to Reliance Jio is pegged at Rs 25,000 crore and the sale is expected to complete within the next three weeks.
The report notes that the sale of RCom’s assets will reduce the lenders’ exposure by 50 percent and it owes about Rs 42,000 crore to its lenders. As part of the deal, Reliance Jio will get 122.4 MHz of 4G spectrum in the 800/900/1800/2100 MHz bands. It will also get 43,000 towers and 1,78,000 RKM (route km) of fiber and 248 media convergence nodes that will cover five million square feet.
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The ruling should come as a big relief to Reliance Communications and the deal will leave it with some portion of spectrum assets and real estate assets. At the closure of the deal, Reliance Jio gets more telecom assets to expand its wired and wireless business in the country. It will mainly help with Jio’s impending commercial availability of Reliance JioGigaFiber service.