Reliance Comms ‘to challenge’ Ericsson’s bankruptcy petition over $180m

Alan Burkitt-Gray
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Ericsson takes three RCom units to Indian bankruptcy court but RCom says it will challenge the petitions

Reliance Communications (RCom) says it “intends to challenge” petitions by Ericsson against it and two of its telecoms subsidiaries over alleged non-payment of debts totalling 11.55 billion rupees ($180 million).

RCom – which is owned by Reliance Industries and is not connected with the entirely separate Indian telecoms company, Reliance Jio – says that the two other divisions are Reliance Infratel and Reliance Telecom.

The matter has gone to the Mumbai branch of India’s National Company Law Tribunal (NCLT), which heard the parties yesterday and has adjourned until 26 September. “The company intends to challenge the said petitions,” said RCom.

Ericsson India signed a seven-year deal in 2014 to operate and manage RCom’s nationwide network. It is alleging that RCom owes 4.91 billion rupees, Reliance Infratel 5.35 billion and Reliance Telecom 1.29 billion. The vendor filed petitions with the NCLT, Indian’s bankruptcy court, to have the three units declared insolvent.

Reuters quotes a statement from Ericsson: “Ericsson has done this as a last resort in order to resolve an issue regarding debt that Reliance owes to Ericsson for services provided under a contract. As the legal process is ongoing, we don’t have any further comments at this point.”

RCom, which also owns the Global Carrier Xchange (GCX) wholesale business, is in the process of merging its Indian mobile business with that of rival firm Aircel. Canadian company, Brookfield Infrastructure, is also buying a 51% stake in its tower company, Reliance Infratel. Both of these deals are engineered to reduce RCom’s debt.