Anil Ambani-owned Reliance Communications' (RCom) business is in deep trouble with more and more tower companies snapping business ties because of pending rentals.
Some of the tower companies are even breaking service level agreements (SLA) with RCom that mandate them to maintain the towers for over 99.5 percent of the time, the Economic Times reported.
Some of the companies have even decided to cut diesel supplies to the towers, which will impact the operation of towers during power cuts. Moreover, a few companies went one step ahead and switched off towers where RCom is the only tenant.
"If we shut the tower, RCom will not have a revenue source to pay us. But we refuse to incur any further expense which uses our cash," ET quoted a person aware of the development as saying.
Indus Towers, Bharti Infratel, American Tower Company (ACT) and GTL Infrastructures are the main tower firms which rent tower space to RCom. It owes GTL and its unit CNIL about Rs 95 crore and Rs 20 crore-Rs 25 crore each to ATC and Bharti Infratel, a source aware of the development said.
Last week, RCom and Aircel had also called off their long due merger talks due to regulatory and legal hurdles. Right after the merger got cancelled, shares of Reliance Communications hit its all-time low and closed 11 percent lower on Tuesday.
As on March, the company had a consolidated total debt of Rs 49,000 crore. The company is also facing strong headwinds because of shrinking subscriber base, leading to huge losses.
"Earlier, they (Rcom) would settle with a 3-month lag, now that gap is already up to 5 months, and even then, when they settle it is only in bits and pieces," ET quoted another tower company official as saying.
With not many alternatives, many of the companies are now opting to take legal recourse to recover their unpaid billed amounts.
Last month, Ericsson's Indian subsidiary had filed insolvency petitions against Reliance Communications and two of its companies to recover unpaid dues to the tune of around Rs 1,200 crore.
On Thursday, RCom's another operational creditor -- Tech Mahindra -- filed three cases under the insolvency and bankruptcy code against Reliance Communications and two of its subsidiaries -- Reliance Telecom and Reliance Big TV -- with the National Company Law Tribunal (NCLT), Mint reported.
