ET: DoT asks Aircel to return spectrum as arrears unpaid

11 June 2019: The Department of Telecommunications (DoT) has demanded Aircel return its spectrum to the government since it has not cleared the arrears against it, creating a major hurdle in the carrier’s bankruptcy process that could hurt lenders.

DoT on Monday told the dedicated bankruptcy court that Aircel did not own the spectrum as an asset, a stance the defunct telecom operator opposed, saying that without airwaves, its entire resolution process would go kaput. The government’s stand, if accepted, could affect the bankruptcy process of another telco, Reliance Communications, as well, hurting its lenders too. Without spectrum — their most valuable asset — both telcos would be less attractive to buyers.

“Spectrum is not an asset of any company. It is only granted for permissive usage and not an asset to be occupied. Today, we have large sums to be recovered and they continue to use our services without payments,” DoT’s legal counsel, additional solicitor general Anil Singh, told a National Company Law Tribunal (NCLT) bench headed by Justice MK Shrawat.

“They (telcos) are getting all the benefits while the dues are getting added. The licences are controlled by us and you do not own or purchase spectrum,” the DoT lawyer said.

ET had reported DoT’s stance on the matter in its June 6 edition.

“Spectrum is an intangible asset for the service provider. This is the single asset we have and without this, the corporate insolvency process will fall through,” said senior counsel Ravi Kadam on behalf of Aircel’s resolution professional. “Licences of spectrum are mortgaged by me to the banks and if you take it away, what happens to the banks,” he added.

NCLT was hearing Aircel’s plea for an injunction against DoT’s application that the telco’s spectrum be withdrawn due to non-payment of dues. The telco told the bankruptcy court that its spectrum was worth Rs 11,000-20,000 crore and the licences, except for the Tamil Nadu circle, would expire only in 2026. The resolution professional said DoT had attended meetings of the company’s committee of creditors, and insisted that if spectrum was withdrawn now, the telco would head straight into liquidation.

The telecom department’s counsel, on his part, said refusal to pay dues and use the spectrum to trade would lead to rewriting of contracts.

For the government, this case is crucial. People aware of the case said the current plan under the insolvency process was to give the spectrum to the asset reconstruction company as part of the assets. The government had formed a six-member panel to ascertain, among other things, how to “safeguard” the value of public resources, such as spectrum, in cases where telecom operators have filed for insolvency.

The Economic Times reported



Categories: General News, India Bankruptcy

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