RCom pays Ericsson $18.6M upfront ahead of settlement

RCom pays Ericsson $18.6M upfront ahead of settlement

Reliance Communications (RCom) has paid Ericsson INR1.31 billion ($18.6 million) in what will doubtless be seen as an attempt to placate the Swedish vendor in the face of renewed legal action against RCom chairman Anil Ambani.

On 4th January, Ericsson brought a second contempt of court charge against Ambani after the operator missed its deadline to repay Ericsson a total of $78.5 million for unpaid service fees. The vendor petitioned for Ambani to be held in civil prison so that he would be prevented from leaving India.

Payment was originally due on September 30th last year but this was pushed back to 15th December. RCom, which is in the process of effectively leaving the market, claims that it was unable to meet both deadlines as the Department of Telecommunications (DoT) has refused to approve its proposed asset sale to Reliance Jio, and has filed a case against the Department.

RCom stated that it “remains fully committed” to use the proceeds from this deal to pay Ericsson, and noted that it used its solvent operational funds to make the partial payment of $18.6 million to the Supreme Court registry. It is now in the process of preparing a full settlement.

The beleaguered operator agreed to sell its mobile assets to Jio in December 2017 after its creditors – including Ericsson – launched legal action over its massive debt burden. However, the government is owed as much as INR29.5 billion in outstanding spectrum fees by RCom, and Jio has sought to ensure that it will not be held liable for these, prompting the DoT to withhold its approval of the asset sale.

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