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Contrasting fortunes for RCom and Airtel

Contrasting fortunes for RCom and Airtel

Things are never quiet for long in the Indian telecommunications market, an impression underlined by recent Indian press reports that indicate further problems for Reliance Communications (RCom) but a major new acquisition on the cards for Bharti Airtel.

RCom has been instructed to pay tower company Bharti Infratel the equivalent of $5.7 million. This comes some time after it signed ten-year deals to use over 500 of Bharti Infratel’s towers across India (in 2010 and 2015), only to pull out of infrastructure-sharing agreements with the tower company.

RCom told the tribunal instructing it to make the payment that its decision was due to “unforeseen circumstances”. However, if enforced, the decision adds to the mounting financial problems of the troubled operator, which late last year announced plans to exit from the telecoms sector (though the RCom website now describes the company as “a leader in fixed-line communications, data center services, enterprise solutions and subsea cable networks”).

RCom had a net debt approximately equivalent to $6.7 billion as April began and is apparently being pursued by a number of creditors, one of which, Ericsson, was recently paid the equivalent of $66.3 million relating to service charges.

There’s happier news for Bharti Airtel, after India’s Department of Telecommunications approved a Bharti Airtel acquisition of Tata Teleservices’ consumer mobile business. There is, however, according to Indian press reports, a condition:  Bharti Airtel must secure bank guarantees of about $1.3 billion to cover spectrum charges.

If the deal goes through, Airtel will acquire Tata Sons’ business units Tata Teleservices and Tata Teleservices Maharashtra, merging these with its main operation and thereby increasing its customer base, as well as boosting its fixed fibre footprint and 4G-suitable spectrum allocation. It’s another interesting development from one of a number of players manoeuvring for position in a market growing more competitive than ever.

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