The Depart of Telecommunication's (DoT) show-cause notice to Reliance Communications (RCom) for yet another default of license fee payment does not move the needle for resolving the crisis that the Anil Ambani-led telecom provider is facing. RCom's dues for spectrum fees alone already amount to Rs 281 crore, according to reports.
There are on-going cases in the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court that have added to the travails of the company. It is already in trouble after the Rs 7,300-crore deal with Mukesh Ambani's Reliance Jio for spectrum sales could not go through as DoT refused to give the go-ahead for the deal. DoT wants Jio to guarantee the payment of the historical dues that RCom owes DoT before it can give the go ahead.
Though the spectrum deal has been scrapped, Jio will continue to share the spectrum with RCom as long as it is available, according to a Jio official. "RCom continues to be a licensed operator. They have not paid, but that does not disqualify them (as a license holder) and DoT is looking into it. DoT has sent show-cause notices for not paying (dues) but the company is in a peculiar situation where there are court cases going on in NCLAT and Supreme Court," said Anshuman Thakur, strategy head of Jio at a recent function where Reliance Industries announced its FY19 Q4 results, according to reports.
"Today they are eligible to share spectrum and use that network to service enterprise customers. If there are any changes, we will get to know, because it's between the courts and DoT," Thakur added. Jio shares RCom's airwaves in the 850 MHz band in 21 circles, including Mumbai, and industry experts say the scrapping of airwaves by DoT could disrupt Jio's services. The spectrum deal for selling 122.4 MHz of spectrum in the 850 MHz band to Jio would have helped ease RCom's debt burden.
As the bankruptcy proceedings of RCom continue in NCLAT, their effect is already putting a strain on the other companies of the Anil Dhirubhai Ambani Group (ADG). RCom shares have hit the bottom while group companies like Reliance Power and Reliance Capital have been plunging. RCom share fell 4 per cent on Thursday to reach Rs 2.40. Reliance Capital fell 11.77 per cent to Rs 151.45 on National Stock Exchange (NSE). Reliance Power plunged 13.23 per cent to Rs 8.20. Reliance Infrastructure skidded 7.99 per cent to Rs 121.50. The Anil Ambani Group companies have been in trouble since the controversy erupted over his company's involvement in the Rafale fighter jet. Rahul Gandhi-led opposition Congress party has made Rafale Defence's role as an offset partner in the deal with French company Dassault a campaign point in the ongoing general elections against Prime Minister Narendra Modi's Bharatiya Janata Party (BJP).
Anil Ambani almost landed in jail after the Supreme Court convicted him of contempt of court for failure to pay Swedish telecom equipment vendor Ericsson. Mukesh Ambani had to step in to save the younger sibling jail time.