Reliance Communications has deposited $18.6m at India’s supreme court in a “partial payment” to creditor Ericsson, which is pushing to have its chairman Anil Ambani imprisoned for alleged contempt of court.
Last week, the Swedish group filed a petition with India’s supreme court, accusing RCom of breaching a court order to pay $79m in unpaid dues. It alleged that the telecom company had “illegally pocketed” the proceeds of asset sales, instead of transferring funds to creditors.
On Monday, RCom said it had deposited Rs1.31bn ($18.6m) of its operational funds with the supreme court registry, as a partial payment towards the amount claimed by Ericsson, which it remained “fully committed” to paying. The initial payment represents more than a third of the Rs3.8bn that the company had in cash and cash equivalents at the end of September, according to its most recent financial report.
It separately accused Ericsson of “attempting a trial by media and sensationalising issues”, and claimed that the Swedish group’s conduct “gravely endangered” the interests of RCom’s secured lenders, which include 17 Indian public sector banks. RCom had total liabilities of more than $7bn at the end of September.
RCom said the supreme court had given it four weeks to submit a response to Ericsson’s petition, and would then give Ericsson a further week to file a rejoinder, after which the court would hear the case.
Ericsson declined to comment.
RCom was once the key asset in Mr Ambani’s corporate empire and among Asia’s most valuable telecoms groups but, over the past decade, it has had big losses in its market share to rivals led by Bharti Airtel and Vodafone India. This left it vulnerable to a price war launched in late 2016 by Reliance Jio, the telecoms company backed by Mr Ambani’s older brother Mukesh.
Since the Ambani brothers divided their father’s Reliance conglomerate between them in 2005, the market capitalisation of Mukesh’s Reliance Industries — which earns most of its revenue from oil products — has grown to $100.3bn. In contrast, the aggregate value of Anil’s listed companies — which include operations in power, infrastructure and financial services — has declined to $3.7bn.
After creditors including Ericsson started proceedings under India’s new bankruptcy law, RCom in December 2017 agreed to sell its main mobile assets to Jio.
Ericsson had claimed $158m from RCom in unpaid fees for outsourced management services, but agreed to accept half that sum after assurances that it would be repaid swiftly with the proceeds of the Jio transaction. The agreement brought the insolvency proceedings to a halt.
But while RCom has handed over some minor assets to Jio, completion of the full deal hinges on approval from the government, which is pursuing RCom for outstanding dues related to spectrum acquisition.
While it fends off the contempt of court action from Ericsson, RCom has launched a contempt suit of its own against the government’s telecoms department, which it accuses of breaching a commitment to approve the Jio deal.
Companies in Anil Ambani’s Reliance group are also seeking at least $11.4bn in 26 defamation lawsuits against politicians and foreign and domestic media groups, including the Financial Times. The complaints, all filed in the western city of Ahmedabad, relate to coverage of the group’s involvement in a big defence deal and its broader financial performance.
