DoT has ‘bad news’ for RCom and Reliance Jio

DoT has ‘bad news’ for RCom and Reliance JioDoT has ‘bad news’ for RCom and Reliance JioDevina Sengupta Executives at Jio and RCom have also been holding parallel talks to resolve this issue as the deal is important for both companies. | ET Bureau | Updated: Dec 22, 2018, 07:49AM IST

MUMBAI: The Department of Telecommunications (DoT) has told Reliance Communications (RCom) and Reliance Jio that it cannot enforce the Supreme Court order for clearing their airwaves deal, as the buyer is unwilling to accept the responsibility for Anil Ambani-owned RCom’s arrears, thus violating a key clause in the spectrum-trading rules.

“We want to make it clear that they (RCom and Jio) are the reason why we cannot enforce the SC’s order. Tomorrow, RCom should not tell the court or file a contempt saying we did not follow the top court’s directions,” said an official aware of the development.

The official said a letter to this effect had been sent to the two companies.

Reliance Jio and RCom did not respond to ET’s queries until press time Thursday.

The DoT’s communication highlights a stalemate in the matter with RCom and Jio both also sticking to their stands — that DoT should abide by the apex court order and approve the deal, and that the Mukesh Ambani-owned Jio can’t be held liable for RCom’s past dues, which wasn’t a violation of trading rules.

Executives at Jio and RCom have also been holding parallel talks to resolve this issue as the deal is important for both companies — RCom needs funds to repay lenders and operational creditors such as Ericsson urgently or risk being pushed into insolvency, while Jio requires the spectrum to augment its 4G holdings to fight Bharti Airtel and Vodafone Idea in the market.

In a statement on Thursday, RCom urged DoT to clear the deal urgently.

“The requirement of giving the bank guarantee as per DoT’s demand has been substituted by the orders of the TDSAT (Telecom Disputes Settlement and Appellate Tribunal) and the Supreme Court, with Reliance Realty providing a non-disposal undertaking and corporate guarantee. Hence, compliance with the trading guidelines is met,” RCom said in the statement.

It added that as a licensee, it “remains committed to discharge any outstanding or disputed amount subject to final adjudication”.

Shares of RCom closed at Rs 14.41, up 1.05%, on the BSE Thursday.

The SC had directed DoT to approve RCom’s pact to sell spectrum to Jio after accepting a Rs 1,400-crore corporate guarantee, instead of a bank guarantee, as well as a parcel of land from an RCom subsidiary to cover a SUC claim of Rs 2,947 crore. The Anil Ambani-owned company has disputed the SUC claim.