SBI pleads with DoT not to cancel spectrum allotted to RCom, RelTel
27 July 2018
NPA-laden State Bank of India has appealed to the Department of Telecommunications not to revoke the spectrum allotted to Reliance Communications Ltd and Reliance Telecom Ltd, saying that it would only add to its huge NPA pile.
In a letter addressed to the DoT, SBI chairman Rajnish Kumar has requested the department to reconsider its decision to cancel the defunct telco’s spectrum at a time when creditor banks are trying to push for the sale of RCom’s businesses to Mukesh Ambani-owned Reliance Jio Infocomm Ltd to recover loans.
SBI’s move comes after the Anil Ambani-owned RCom approached the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against the government’s show-cause notice on spectrum and licence cancellation.
RCom got a temporary reprieve from TDSAT till 10 August on the licence and spectrum cancellation showcause notice served on the company by DoT.
The company is learnt to have informed TDSAT that while DoT has raised a demand for payment of Rs774 crore on the company, this payment has already been made to the government through encashment of previous bank guarantees. Therefore, RCom contends it only needs to renew the encashed bank guarantees, which anyway will be payable only in March 2019.
Posting the matter for directions on August 10, the tribunal has instructed the respondent (Telecom Department) “not to give effect to the decision which it may take in the meantime”.
SBI has asked DoT to reconsider any move to cancel Reliance Communications’ spectrum as it would cause “irreparable harm” to lenders and jeopardise their ongoing efforts to recover dues. SBI and other lenders are engaging with the company to examine possibility of reissuance or extension of the bank guarantees, as required by the Telecom Department, the bank said in a letter.
Creditor banks are in the midst of an asset monetisation programme after loans to Reliance Communications and Reliance Telecom turned non-performing assets. The asset monetisation process is being carried out under the supervision of an independent committee led by former Reserve Bank of India Deputy Governor, SS Mundra, the SBI letter said.
“In the meantime, the lenders including SBI are engaging with the companies to examine the possibility of re-issuing / extending the bank guarantee subject of course to all due internal approvals of respective banks,” the letter said.
The letter also points out that the proceeds from the sale would be used to repay Rs45,000 crore in dues to lenders.
The decision of the DoT was prompted due to pending dues worth over Rs700 crore from Reliance Communications in lieu of the spectrum allocated to the company in 2013 and 2015.
A report in The Economic Times on Monday said the DoT had sought bank guarantees from Reliance Communications against these dues, failing which, the department would revoke the spectrum allocation.
RCom is under debt resolution process under the Insolvency and Bankruptcy Code, 2016 (IBC) and has not been paying any dues till the completion of the process. RCom had said that if the deal with Reliance Jio goes through, the latter will take on deferred spectrum payment liabilities and any BGs given now by RCOM would anyway be replaced by the acquirer shortly.