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Jio stands its ground, tells telecom department won’t pay RCom dues

New Delhi: The troubles for Anil Ambani-led Reliance Communications (RCom) are far from over. In a meeting with top officials from the Department of Telecommunications (DoT), Reliance Jio Infocomm made it absolutely clear that in accordance with the agreement between the two operators, Jio would not be responsible for any previous liabilities of the latter.

DoT in the meeting said it would not be able to grant the no objection certificate (NoC) until RCom gave an undertaking that it would be responsible for any liabilities which might arise.

“Jio said they would like the agreement to be cleared, but cannot give any such undertaking as asked by DoT. So it is now up to RCom,” an official in the know of the meeting said.

Neither RCom nor Jio commented on the issue.

The tripartite meeting on Wednesday was held between RCom, Jio, and DoT to try and reach an agreement over a pending NoC that the telecom ministry had to give for spectrum trading between the two operators. With Jio refusing to budge from its earlier stance, the final outcome of the deal now lies with RCom, which has the option of moving the Supreme Court (SC) to challenge DoT’s stance.

On December 14, DoT had told the apex court that it would issue the NoC to RCom for the spectrum sale within two days, provided the company’s arm, Reliance Realty, did not sell the “preference shares that are reflected in the financial statement of 2017-2018.” RCom had then assured the SC that it would not do so without prior permission from the department.

The government’s nod for spectrum sale was in limbo after Jio wrote a letter to DoT on Friday seeking clarifications and assurances that it would not be held liable for RCom’s dues related to airwaves once its deal with RCom was completed. The condition forced DoT to hold its NoC as the rules state that the government can ask operators to clear dues before it gives a nod.

Earlier DoT had insisted that the RCom furnish bank guarantees worth Rs 30 billion. It had rejected the company’s offer to pledge land to cover the amount. The problem, DoT officials said, with the corporate guarantee backed by land was that it could get into legal tangle, which was not something the government favoured. A bank guarantee would have been easily encashable, they said.

The impasse following the meeting could also mean revival of insolvency against RCom and its arm, Reliance Infratel.

Ericsson India had moved an insolvency petition against RCom, which was accepted by the Mumbai Bench of the National Company Law Tribunal (NCLT). Later, the two companies reached an agreement in the NCLAT. According to the agreement, RCom would pay Rs 5.5 billion to Ericsson, failing which the latter could revive its insolvency against the telecom company.

RCom had then approached the apex court seeking an extension of the deadline, which was initially September 30 and later changed to December 15.

The top court, however, had then made it clear that there would be no extensions beyond that. It had also directed RCom to pay Ericsson interest at the rate of 12 per cent per annum for missing the September 30 deadline.