May 18, 2018 / 7:31 AM / a year ago

Debt-laden RCom in advanced talks with Ericsson to resolve issues

MUMBAI (Reuters) - Reliance Communications said it was in advanced talks with Ericsson to resolve “commercial issues”, after two sources indicated it was currently uncertain if the firms’ discussions over dues would lead to an out-of-court settlement.

FILE PHOTO: A man speaks on his mobile phone as he walks past a closed shop painted with an advertisement of Reliance Communications in Mumbai, India, January 29, 2018. REUTERS/Shailesh Andrade/File photo

Earlier this week, India’s bankruptcy court admitted a plea by the Swedish telecom gearmaker seeking insolvency resolution against debt-laden Reliance Communications (RCom) over unpaid service dues, potentially derailing the company’s plans to sell assets to larger rival Reliance Jio.

Ericsson, which signed a seven-year deal in 2014 to operate and manage RCom’s nationwide telecoms network, is seeking 11.55 billion rupees ($170 million) from RCom and two of its subsidiaries.

“We confirm that RCom and Ericsson are at an advanced stage of discussions to expeditiously resolve commercial issues,” the Indian company said in a securities filing on Friday, adding a resolution would enable it to exit the bankruptcy court process.

RCom is also confident of “expeditiously” proceeding on its asset sale deal agreed with Jio and the overall debt resolution plan agreed with its creditor banks, it said in the statement.

One of the two sources who spoke to Reuters earlier on Friday said RCom had approached Ericsson, but with a lack of clarity around payment of dues “a settlement currently looks uncertain”.

The two sources, who asked not to be named as the talks are private, said Ericsson could withdraw its plea if an out-of-court understanding is reached.

Ericsson said it does not comment on speculation.

Shares in RCom, controlled by wealthy businessman Anil Ambani, had soared 30 percent on reports of settlement talks with Ericsson, but reversed gains to trade down 2.7 percent by 0920 GMT. The Mumbai market was down 0.7 percent.

With debt totaling 457.33 billion rupees ($6.73 billion) at end-March 2017, RCom is the most-leveraged of all listed telecoms carriers in India.

To raise funds, RCom announced plans late last year to sell most of its wireless assets to mobile carrier Reliance Jio in a deal sources said was worth about $3.8 billion. Jio, the telecoms venture of Reliance Industries, is controlled by India’s richest man and Anil’s elder brother, Mukesh Ambani.

Reporting by Sankalp Phartiyal; Editing by Euan Rocha and Himani Sarkar

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