RCom Requests DoT to Renew Telecom Licence for Two Decades

On Thursday, RCom wrote to DoT to renew its telecom license for another 20 years. This move will ensure that the defunct telco retains its rights over spectrum and keeps running its enterprise business.

RCom Looking to Receive Telecom License Renewal

In response to RCom's request, the DoT has told the telco to provide information about its ownership details. Right now, a resolution professional, Deloitte, is running the company as part of a bankruptcy process under the Insolvency and Bankruptcy Code (IBC).

One of the officials said, "RCom's license as an operator expires in July and it has approached the DoT for renewal".

They added, "the lenders or RP will now have to figure out who will take the onus of accepting responsibility as the owner. Whoever accepts ownership will need to respond later to queries around payment of statutory dues".

RCom currently only operates its enterprise business - its mobile business shut down in late 2017. Moreover, it hasn’t paid any of its ₹26,000 crore AGR dues, citing its ongoing bankruptcy proceedings. The telco also owns airwaves in the 850 MHz band in 14 of India’s 22 telecom circles.

DoT's RCom Dilemma

The only way the DoT has any hope of recovering the said dues is if RCom remains a licensed entity. However, DoT rules clearly state that the department can terminate licenses over non-payment of dues. If DoT cancels RCom's license, the telco can't sell its spectrum. And if it can't sell its spectrum, the whole resolution process goes to dust.

However, this is not all. RCom and Reliance Towers' operational creditors are only receiving ₹672 Crores and ₹88 Crores, respectively. This amount has to go to hundreds of creditors, such as tower companies and equipment vendors. Since DoT is also an operational creditor, it looks likely that it won't even receive a fraction of what it is claiming. As such, the telecom department has already moved court saying that the telco can't sell its spectrum holdings.

But, reiterating, if the spectrum goes, so does RCom's resolution plan. Incidentally, NCLAT also barred Aircel, another bankrupt telco, from selling its spectrum, unless DoT’s dues are cleared. Of course, Aircel has challenged the ruling in the Supreme Court.

Who Will Buy RCom's Assets?

The telco's committee of creditors cleared UVARCL to pick up its spectrum and fibre for ₹12,760 crore, staggered over 12 years. However, NCLAT has not cleared UVARCL's proposal for the bankrupt telco. If UVARCL does not manage to pay, then lenders cannot recover a large chunk of ₹20,000-23,000 crore expected from the sale of the telco and its units.

Reliance Jio will pick up Reliance Infratel, as reported previously. SBI also removed the 'fraudulent' tag from its accounts to facilitate the sale. A person aware of the matter said, "the tower businesses do not need this license as a telco can lease them out. However, the enterprise segment is still running and will be halted if RCom's license expires".

RCom had a debt of ₹46,000 crore at the time of filing for bankruptcy. As many as 53 financial creditors have claimed ₹57,382 crore. However, Deloitte, the resolution professional, has only accepted ₹49,224 crore.