Aircel pins hopes on release of ₹751-cr bank guarantees by DoT to stay afloat

Rajesh Kurup Mumbai | Updated on May 16, 2018 Published on May 16, 2018

Aircel had contested DoT’s demand for ₹751 crore before TDSAT, which directed the bank guarantees to be released within four weeks in an order dated January 9   -  THE HINDU

Relates to transfer of spectrum to Bharti Airtel in 2016

Beleaguered telecom operator Aircel, which is looking at ways to stay afloat, is pinning its hopes on the release of bank guarantees worth ₹751 crore to help it operate as a going concern and pay salaries to its nearly 3,000 employees.

The bank guarantees, if received soon, will be the lifeblood to continue operations for another 4-6 months.

The Department of Telecommunications (DoT) is holding about ₹751 crore as bank guarantees submitted when Aircel transferred its Broadband and Wireless Access (BWA) spectrum to Bharti Airtel, sources close to the development told BusinessLine.

In April 2016, Aircel transferred its BWA spectrum to Airtel. However, Aircel had to pay DoT ₹298 crore in cash and ₹453 crore in bank guarantees (totalling ₹751 crore) as a pre-condition for clearing the spectrum transfer. These were arranged by Airtel, which deducted the same from the consideration price.

TDSAT’s order

Aircel had contested DoT’s demand for ₹751 crore before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which in a January 9, 2018, order directed that the bank guarantees be released within four weeks. TDSAT permitted DoT to retain ₹298 crore till another issue was settled.

Later, on February 27, Aircel filed for bankruptcy protection with the National Company Law Tribunal (NCLT) in Mumbai, after its Malaysian promoter, Maxis Communications, decided against pumping additional funds into the company. Following the filing, DoT — which had not released the funds till then — decided to invoke all the bank guarantees. Aircel then moved TDSAT, which rejected the case on April 23, prompting the operator to move the Supreme Court. While DoT withdrew its letter seeking to invoke ₹453 crore bank guarantees, on May 15, the Supreme Court admitted Aircel’s appeal for a refund of ₹298 crore.

An email sent to Aircel did not elicit any reply as of going to press on Wednesday.

In April, Maxis Communications infused an additional ₹95 crore in Aircel to enable the telecom operator pay salaries and meet certain expenses. The move, which was more of a goodwill gesture than an investment, came after the Malaysian parent declined in February to provide any more funds.

According to the Insolvency and Bankruptcy Code (IBC), lenders will now have to sanction additional “working capital loans” to ensure that the company’s operations are not stalled. The lenders are yet to take a call on further infusion of funds.

Published on May 16, 2018

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.