New Delhi: Anil Ambani-owned Reliance Communications (RCom) on Monday temporarily staved off threats of licence cancellation from the department of telecommunications (DoT) by approaching the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) for limited protection.
The TDSAT has accordingly instructed the DoT to “not give effect” to any decision until the next hearing takes place on August 10, 2018.
RCom and the DoT are currently at loggerheads over a show-cause notice issued by the telecom department last month, which demanded the payment of Rs 774 crore in bank guarantees towards upcoming spectrum payments.
In the notice, the DoT warned that if RCom did not furnish the required bank guarantees, the company could see its licence cancelled, which would also result in the ministry taking over the company’s spectrum.
If it doesn’t furnish the bank guarantees, the DoT’s threats could throw a wrench in the RCom-Reliance Jio deal between the Ambani brothers.
The acquisition, which would see the Anil Ambani selling RCom’s wireless assets to his older brother for over Rs 18,000 crore, would go a long way in slashing RCom’s debt of over Rs 40,000 crore.
However, if the bank guarantees aren’t furnished and the DoT follows through with its threat, RCom’s spectrum would be attached, rendering any deal useless.
Ambani defence
According to media reports and company sources, RCom has pointed towards the fact that the DoT already holds bank guarantees worth Rs 2,540 crore that the TDSAT ordered should be returned to the company earlier this month. The company has also added that any pending bank guarantees were not causing loss to the telecom department, as they are not interest-bearing.
These separate bank guarantees of Rs 2,540 crore relate to payment made for one-time spectrum charge in 2016, which were allegedly due towards payment of market-linked prices for excess spectrum held by a telco. RCom contested the demand for these bank guarantees and the TDSAT ruled in the company’s favour in early July.
The DoT is not buying this argument, however, and has noted that it plans on appealing the earlier TDSAT ruling on the Rs 2,540 crore bank guarantee in the Supreme Court.
With the threat of licence cancellation looming, the Anil Ambani-firm, however, plans on coming up with the Rs 774 crore that the DoT has demanded, although it wasn’t immediately clear where it would find the money.
On Monday though, in search of temporary relief, the company approached the TDSAT, and plead that the action that may be taken under the impugned show-case notices is drastic and may even amount to terminating the licence and withdrawal of spectrum.
The TDSAT’s order directing limited protection for RCom until the next hearing on August 10. Credit: The Wire
The tribunal consequently noted that “limited protection may be granted by directing the respondent not to give effect to any decision which they may take in the meantime”. It also added that the respondent (DoT) “may file a reply or short reply by the next date and bring on record of the decision taken by them, if any”.
The matter has now been posted for directions on August 10, 2018.