//Anil Ambani sends big brother thank you note

Anil Ambani sends big brother thank you note

NEW DELHI: Making a dramatic intervention,
Mukesh Ambani saved his younger brother Anil from imprisonment by paying money owed by him to
Ericsson on Monday. The bailout from the world’s 13th richest man, as per Forbes ranking, came literally at the eleventh hour — Tuesday was the deadline for Anil’s Reliance Communications (
RCom) to clear Rs 580 crore due to the Swedish equipment maker.

In a late evening statement, Anil Ambani thanked his brother and sister-in-law Nita.

“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,” Anil Ambani said in the statement.

“I and my family are grateful we have moved beyond the past, and are deeply touched with this gesture,” he added.

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An RCom spokesperson added that a payment of Rs 550 crore, plus interest, has been paid to Ericsson, as per the order of the Supreme Court. Anil Ambani faced a jail term of three months if the money hadn’t been paid by March 19.

On Monday, RCom, the now-bankrupt Anil Ambani-owned telecom operator, paid Rs 458.77 crore directly to Ericsson which also received Rs 3 crore more from the SC registry that the telco had deposited as penalty interest some 20 days ago.

SPECTRUM AND TOWER SALE SCRAPPED

With the carrier having already deposited Rs 118 crore earlier, RCom completed the payment of the nearly Rs 580 crore dues, bringing to a close its 18-month-long battle with the Swedish telecom gearmaker which had claimed dues for its maintenance services.

People familiar with the matter said that Mukesh Ambani, also Reliance Jio’s chairman, had contributed around Rs 480 crore to the Ericsson payment. The statement by RCom had no details of the nature of the assistance extended by Mukesh. The persons cited above said it was an outright payment by the RIL chairman and not a loan.

Soon after Anil Ambani’s statement, #MukeshNitaSaveAnil was trending on social media platform Twitter late Monday evening.

“Ericsson has received the payment along with up to date interest and it will accordingly be withdrawing the petitions filed for insolvency,” said senior advocate Anil Kher who has been representing the equipment maker.

The company’s attempts to pay part of the Rs 580 crore dues, including interest, to Ericsson with income tax refunds of Rs 260 crore failed with the National Company Law Appellate Tribunal (NCLAT) refusing to direct the lenders, including main financial creditor State Bank of India, to release the funds.

The developments come on a day RCom scrapped its spectrum and tower sale to Jio by mutual consent. RCom had banked on the sale to pay off its financial lenders as well as operational creditor Ericsson. But the deal fell through mainly after the telecom department refused to clear it, saying the deal didn’t meet spectrum trading rules. This, after Jio declined to bear any historical dues of RCom, which is weighed down by a debt of Rs 46,000 crore. The inability to sell the assets forced RCom to decide late January to voluntarily file for bankruptcy protection in the National Company Law Tribunal (NCLT).

“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, making it clear that the deal to buy switching nodes and fibre from RCom, which had been completed, stood.

RCom shares plunged 9.3% on Monday to close at Rs 4 on the BSE Monday.

ET was the first to break the story about RCom making the payment, on its online platforms earlier Monday.

The developments mark an important milestone in the relationship between the two brothers who had a public fallout in 2004 over a dispute to control the oil-to-textiles conglomerate after the demise of their father, Dhirubhai Ambani. As per a settlement reached in 2005, which included a non-compete clause, Anil received a bunch of new businesses, which included telecom, financial services and power, while Mukesh got control of petrochemicals and refining.

The non-compete clause was scraped in 2010, and Mukesh quickly re-entered the telecom sector, buying a company which had won 4G licences in all 22 circles. The venture, now known as Reliance Jio Infocomm, launched commercial operations in September 2016, disrupting the market with its cheap data rates and free voice, forcing smaller operators, including RCom, to shut shop, and two big players, Idea and Vodafone, to merge.

The financial woes for RCom though don’t end with this payment to Ericsson. It has already defaulted on a Rs 21 crore-spectrum payment to the telecom department and needs to pay another Rs 281 crore to the government in April.

ERICSSON VS RCOM

The battle between Ericsson and RCom started when the Swedish company moved a bankruptcy court in 2017, alleging that it had not been paid dues of around Rs 1,500 crore after signing a seven-year deal in 2013 to operate and manage the telco’s nationwide network.

The case moved from the NCLT — which admitted Ericsson’s insolvency plea against RCom — to the NCLAT, which stayed the decision and ordered a settlement for Rs 550 crore to be paid to the gearmaker by September 30.

With RCom not meeting the deadline, Ericsson moved Supreme Court, which gave RCom another deadline — December 15, 2018 — to repay dues, both of which were missed by the carrier, prompting the Swedish company to file three contempt petitions against RCom chairman Anil Ambani. Its two units were made party to the case.

The apex court, in February, held Ambani in contempt for not paying Ericsson’s dues despite having the money to do so. The court threatened to send the businessman, and the chairmen of RCom units, Reliance Infratel and Reliance Telecom — Chhaya Virani and Satish Seth — to jail if the money wasn’t paid in four weeks, which ends March 19.

The Anil Ambani-owned operator is also facing contempt charges from minority shareholders of Reliance Infratel.

RCOM-JIO SPECTRUM, TOWER DEALS FORMALLY SCRAPPED

“The agreements dated December 28, 2017 and August 11, 2018 entered into between RCom, RTL, RITL (RCOM Group) and RJIL (Jio) respectively for sale of certain specified telecom assets have been terminated today by mutual agreement,” RCom said in its regulatory filing on Monday. Reliance Telecom (RTL) and Reliance Infratel (RITL) are units of RCom.

Late 2017, RCom in a bid to reduce its debt of Rs 46,000 crore and pay off its lenders and creditors, had inked a Rs 18,100 crore deal to sell 122.4 MHz of spectrum, 43,000 telecom towers, switching nodes and fibre to Jio and some real estate to Canada’s Brookfield.

RCom said “transactions have become incapable of being consummated” on account of various developments in the last 15 months. They include “non-receipt of consent/objections” from RCom’s over 40 lenders — both Indian and foreign — despite over 45 meetings in 15 months. Jio said the deal to but nodes and fibre stood.

It also cited DoT’s refusal to permit the spectrum sale deal, the National Company Law Appellate Tribunal’s (NCLAT) February order restraining “the sale, transfer or alienation of any movable or immovable property” of RCom and its units as reasons for the deal being scrapped.

“RCom Group is committed to a comprehensive resolution of their overall debt, with transparency, certainty and finality, through the NCLT process,” the telco added.

The NCLAT will hear the case on April 8.

The carrier, which was once India’s second-largest telco, was forced to shut its wireless business late 2017 amid plunging revenue, widening losses and its debt burden.

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