Bharti Airtel's bid for the spectrum assets of Anil Ambani's defunct Reliance Communications (RCom) is likely to roil the telco wars even further. A rival's bid has arrived when Asia's richest man Mukesh Ambani's Reliance Jio has sought an extension for the November 12 deadline for making an offer, media reports say. Jio had tried earlier to acquire the assets before his brother's company went under insolvency proceedings.
If an extension was not given, RCom's committee of creditors was expected to meet in a day or two to discuss the various offers
Sunil Mittal's Bharti Group, through two of its companies, on Tuesday made a conditional bid for the spectrum of RCom even, according to a Business Standard report. Interim resolution professional (RP) Anish Nanavaty had sought bids from prospective buyers for the company as a going concern with assets and businesses like telecom towers, spectrum, a fibre network, real estate and an enterprise business, in order to recover debts of more than Rs 33,000 crore of secured creditors, the report said.
Deferred spectrum charges
Apart from Bharti Airtel and Bharti Infratel, four players have reportedly bid for the assets of RCom. They may include US-based Varde Partners, a private equity fund that has a joint venture in India with the Aditya Birla group.
The report quotes a Bharti spokesperson as saying: "A conditional bid has been made primarily for the spectrum, which is a precious asset. Bid conditions include that the overall consideration will primarily be by way of the deferred spectrum charges payable to the government being passed on to us on terms and schedules applicable to such deferred payments."
Reliance Jio has sought 10 days' deadline extension, sources said. However, it is not clear as to whether Nanavaty has granted the extension and queries to him did not elicit any response, the report says.
If an extension was not given, RCom's committee of creditors was expected to meet in a day or two to discuss the various offers, the report says, quoting an unidentified source. Jio has been using the 58 MHz of RCom spectrum in the 800MHz band crucial for 4G services in 21 circles through an agreement signed earlier. The licence for the spectrum ends in 2021.
Unsustainable levels
Reliance Jio had last year tried to buy RCom assets, including 43,000 telecom towers and 178,000 km of optic fibre network, and right to use the spectrum. But the deal could not close because of Department of Telecommunications (DoT) insistence for an undertaking from Jio or the RCom promoters taking responsibility to clear any past dues, which Jio refused.
After the creditors also failed to reach a consensus whether to clear the asset sale or not, RCom went to the National Company Law Tribunal (NCLT) for proceedings under the Insolvency and Bankruptcy Code (IBC).
The recent Supreme Court order on Adjusted Gross Revenue (AGR) has further complicated the RCom asset sales situation as the defunct company would owe the government Rs 16,456 crore apart from the overdue spectrum user charges. Industry observers say that DoT still retained its right to claim the whopping dues from any future buyer of RCom assets.
AGR verdict has thrown the Telco scene into chaos with the second biggest player by market share, Vodafone Idea, indicating a desire to quit the Indian market over unsustainable levies and spectrum charges. While the telecom industry trade body has sought the government of Prime Minister Narendra Modi to intervene, Reliance Jio has contended that the government should not spend taxpayer's money to revive the telcos. A high-level panel of officials is looking into the issue.
