In a scene straight out of a Bollywood movie, Mukesh Ambani helped younger sibling Anil clear telecom equipment maker Ericsson's Rs 5.8 billion dues and avoid imprisonment. The helping hand from the elder Ambani came just a day before the deadline set by the Supreme Court for the pay-out, failing which Reliance Communications chairman Anil may have faced a jail term of three months.
On Monday, RCom paid the Swedish company Rs 4.6 billion, which also received an additional Rs 30 million from the Supreme Court's registry that the Anil Ambani-led firm had deposited as penalty interest. The bankrupt telecom company had deposited Rs 1.2 billion earlier, clearing all dues and bringing to an end the 18-month long legal spat with Ericsson, which had claimed dues for its maintenance services. It is still not clear whether the money by Mukesh is in the form of a loan or an outright grant.
In a statement showing his gratitude for brother Mukesh and sister-in-law Nita, Anil said, "My sincere and heartfelt thanks to my respected elder brother, Mukesh, and Nita, for standing by me during these trying times, and demonstrating the importance of staying true to our strong family values by extending this timely support."
"I and my family are grateful we have moved beyond the past, and are deeply touched with this gesture," the beleaguered businessman added.
How Things Went Downhill
The situation for Anil Ambani came to a nought after his plan to reduce RCom's Rs 460 billion debt load failed to materialise. A two-pronged strategy to sell spectrum, towers and switching nodes to Mukesh-led Reliance Jio Infocomm and some real estate assets to Canada-based Brookfield failed to take off. The spectrum sale deal with Jio failed after the telecom department refused to clear the transaction, arguing it did not meet spectrum trading norms. The inability to sell assets forced RComm to voluntarily file for bankruptcy protection in National Company Law Tribunal in January.
Both the companies mutually scrapped the spectrum trading deal on Monday. "The termination of the Master Agreement shall not, in any manner, affect the rights and obligations of the parties, accrued prior to the date of termination," Jio said in a separate statement. The Reliance Industries subsidiary had already bought switching nodes and fibre from RCom and the termination does not affect the transaction already completed.
"Non-receipt of consents/objections from RCom's over 40 foreign and Indian Lenders in relation to the proposed transactions despite over 45 meetings and the passage of over 15 months," the debt-laden company said in an exchange filing. The company also cited failure to get "requisite permissions and approvals from Department of Telecom" as the reason for the deal being scrapped. RCom now plans to resolve its overall debt through the bankruptcy process in NCLT. The tribunal will next hear its case on April 8.