Reliance Communications' attempt to sell its wireless assets to Reliance Jio Infocomm to substantially reduce its debt hit a roadblock on Tuesday with an arbitration tribunal barring the company and its two units from transferring or selling any assets without its permission.
The tribunal passed the order in response to a petition by telecom gear supplier Ericsson seeking recovery of unpaid dues. Ericsson filed insolvency petitions against RCom in September seeking to recover a total of around USD 177.8 million from the company.
The Swedish telecom gear maker signed a seven-year deal in 2014 to operate and manage RCom's nationwide network, seeking payment of unpaid dues.
RCom owes banks around USD 7 billion, according to the latest debt figures made available to the public, and this excludes its debts to vendors.
RCom had arranged to sell its wireless assets to Reliance Jio Infocomm in a deal worth Rs24,000 crore (USD 3.69 billion) as part of its efforts to reduce debt. The assets proposed to be transferred included spectrum tower, fibre and other assets.
The tribunal's order would hamper both the company's efforts to reduce debt and the insolvency proceedings initiated by creditor banks.
The company's biggest foreign lender, China Development Bank, had already filed an insolvency petition against the company, but withdrew this petition after RCom announced a debt reduction plan, which included the Jio deal.
RCom previously said it aimed to close the deal by March. RCom's sale of assets such as airwaves, mobile masts and fibre optic would mark a big step in its quest to reduce the USD 7 billion debt it owes to Indian and foreign banks. – Domain B