An Indian arbitration tribunal has barred Reliance Communications Ltd (RCom) and two of its units from transferring or selling any assets without the tribunal’s permission, potentially undermining its debt reduction plan.

The interim order was issued on March 5, according to a copy of the document seen by Reuters on Tuesday. It did not say when a final ruling would be issued. The interim decision is in response to a plea to the tribunal by Swedish telecom gearmaker Ericsson, which signed a seven-year deal in 2014 to operate and manage RCom’s nationwide network, seeking payment of unpaid dues.

In a separate case, Ericsson said it was owed $177.82 million by RCom and two of its units.

The arbitration tribunal’s decision could derail Chairman Anil Ambani’s plan to cut RCom’s debt by selling most of the firm’s wireless assets to Reliance Jio Infocomm Ltd for $3.8 billion. Jio is the telecom firm owned by Anil Ambani’s elder brother Mukesh Ambani, India’s richest man.

RCom previously said it aimed to close the deal by March. RCom and Jio did not respond to requests for comment on Tuesday. Ericsson declined to comment on the case.

 

Huge debt

RCom’s sale of assets such as airwaves, mobile masts and fibre optic would mark a big step in its quest to reduce the $7 billion debt it owes to Indian and foreign banks.

China Development Bank (CDB), RCom’s biggest foreign lender which had sought to push RCom into insolvency, withdrew its petition earlier this year after the firm announced its debt reduction plan that included asset sales.

 

 

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