The lenders to telecom companies and the Government would be staring at a whopping ₹96,389 crore NPA, following an appellate tribunal judgment that telecom firms under insolvency proceedings can sell spectrum only after dues to the licensor are footed.

This includes Adjusted Gross Revenue (AGR) dues of ₹38,389 crore the companies owe to the Department of Telecommunications (DoT), an operational creditor to the beleaguered firms.

Related Stories
Telecom spectrum can be subjected to IBC proceedings, rules NCLAT
Requisite spectrum dues cannot be wiped off by triggering corporate insolvency under IBC

The banks – including the State Bank of India, LIC and Chinese banks – were hoping to recover about ₹40,000 crore from Reliance Communications (RCom) and Reliance Telecom Ltd (RTL), and another ₹18,000 crore from Aircel following the resolution process. On its part, Aircel owes ₹12,389 crore and RCom ₹26,000 crore to the Department of Telecommunications (DoT) as AGR dues.

CoC likely to move Apex court

The National Company Law Appellate Tribunal’s NCLAT) judgment last week that telecom companies under insolvency proceedings can sell spectrum only after Government dues are cleared will push these firms into liquidation. The ruling will derail the resolution processes of these telecom firms, and the Committee of Creditors (CoC) are planning to move the Supreme Court against the order, sources close to the development said.

Following the resolution process, about 38 lenders, including Chinese Banks led by China Development Bank were expecting to recover ₹40,000 crore - China Development Bank (₹9,000 crore), SBI (₹3,000 crore) and LIC (₹3,700 crore) – from RCom, while that from Aircel was at ₹18,000 crore from Aircel.

Implications for Aircel

After the NCLAT ruling, the resolution plan of UV Asset Reconstruction Company Ltd (UVARCL) for Aircel, approved in June 2020, will be “untenable”, and the company will be heading for liquidation. The lenders will not be able to recover any of the debt.

Related Stories
NCLAT dismisses DoT’s plea in Aircel licence moratorium matter citing delay in appeal

The biggest loss in Aircel liquidity would be State Bank of India (₹5,000 crore), followed by Bank of Baroda, Canara Bank, Punjab National Bank and China Development Bank, among others, they added.

Related Stories
DoT forms committee to examine issues arising out of telcos’ insolvency
Panel to deliberate on status of ‘spectrum’ and recovery of dues under IBC rules

UVARCL was also the successful bidder for the assets of RCom and RTL, which primarily include spectrum and real estate. The resolution plans of RCom and RTL were approved by the firms’ lenders and are awaiting the NCLT Mumbai bench’s approval since March 2020.