Ericsson Files Insolvency Case Against Reliance Communications: 10 Points

Ericsson is seeking a total of Rs. 1,155 crore from Reliance Communications (RCom) and two of its companies.

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Ericsson Files Insolvency Case Against Reliance Communications: 10 Points

Reliance Communications said that it will challenge Ericsson's petition

The India unit of Ericsson has filed insolvency petitions against Reliance Communications (RCom) and two of its subsidiaries to recover unpaid dues, the mobile operator said in a regulatory filing on Wednesday. The Swedish telecom equipment maker, which signed a seven-year deal in 2014 to operate and manage Reliance Communications' nationwide network, is seeking a total of Rs. 1,155 crore from the three companies - RCom, Reliance Infratel and Reliance Telecom, the filing noted. Meanwhile, Reliance Communications also said that it will challenge Ericsson's petition.

10 Developments In Ericsson-RCom Case


1) Reliance Communications reported its third quarterly loss in a row last month and is trying to find ways to cut its debt after creditors gave it a reprieve on loan repayments until the end of 2017.

2) Cut-throat competition in the telecom sector after the entry of Reliance Jio has forced many operators to cut their tariffs, thus hurting their financials.

3) Shares in Reliance Communications fell as much as 3 per cent today, a day after the Indian arm of Ericsson filed a petition seeking to drag the debt-laden telecom firm into insolvency due to unpaid dues.

4) "This seems like the first salvo has been fired but Ericsson is unlikely to push RCom to bankruptcy," said a Hong Kong-based trader. Ericsson is protecting its own interests and this could open the door for negotiation later, the trader said.

5) Reliance Communications' filing said the Ericsson case would go before the National Company Law Tribunal (NCLT), the designated court for bankruptcy cases in India, on September 26.

6) "After hearing the parties, the NCLT has adjourned the matter to 26th September, 2017. The company intends to challenge the said petitions," RCom said.

7) Reliance Communications is trying to find ways to cut its debt after creditors gave it a reprieve on loan repayments until the end of 2017.

8) The Brookfield and Aircel deals are expected to reduce its debt burden by Rs 25,000 crore.

9) Last year the government revamped bankruptcy laws to help cut a record $150 billion in impaired bank loans.

10) The rules allow financial as well as business creditors to trigger bankruptcy proceedings against a company which has defaulted on payments.

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