Reliance Communications and Swedish gear maker Ericsson had joined hands in 2013 to manage the wireline and wireless network of Anil Ambani's company. And now that the partnership is coming to an end, about 4,000 staffers of Reliance Communications are set to be re-absorbed by the firm. As they say: "You can always go home."
Ericsson's services are said to have boosted Reliance Communications' business quite a bit in terms of operational expenses as well as other forms of cost optimisation. It reportedly also handled the day to day functions of the firm efficiently, due to which the Indian firm could focus on larger areas of business. But RCom and Ericsson decided to sever ties over non-payment of dues to the latter, amounting to approximately Rs 1,150 crore.
In tune with the deal, the employees that had been transferred to Ericsson will now be back with RCom. With this, the Indian firm is set to see a major boost in its headcount to about 9,500 and the firm will now manage the services on its own, reported Business Standard.
When the staffers were initially moved to Ericsson, the number is said to have been about 5,000. However, many jobs have reportedly been replaced due to the advent of technology and automation.
Meanwhile, the Swedish firm had gotten in touch with the National Company Law Tribunal on September 11 to recover the dues. Ericsson had earlier filed a petition regarding the insolvency of Reliance Communications and the issue will be heard on November 9, 2017. The tribunal had adjourned the hearing and the two parties even had tried to negotiate the terms.
However, these talks had failed to bring any respite and Ericsson had remained adamant on taking RCom through the bankruptcy procedures. Sources had then told the Economic Times that Ericsson wanted RCom to pay Rs 550 crore, which had been promised by the Indian firms at various stages of the deal. Not just that, RCom had reportedly also promised to pay Rs 125 crore by July 31 and pay Rs 60 crore the week after. However, Ericsson is still waiting for these payments.
"Whether it is in insolvency or debt restructuring, Ericsson's due is likely to become a casualty," an industry expert told ET, adding that an out of court settlement would be the ideal option for both the firms.
