Indian Supreme Court may move to block spectrum sales

Indian Supreme Court may move to block spectrum sales

There’s been further courtroom drama in India over the issue of shared or sold spectrum and its effect on AGR dues.

The Indian Supreme Court is now making things more difficult for would-be insolvents Reliance Communications (RCom) and Aircel to sell off their assets.

In fact the Court has said that the government should move to cancel licenses and take back spectrum if companies with insolvency problems prove unwilling to pay.

According to the Indian press, RCom and Aircel were, apparently, all ready to sell their assets, including airwaves, to a third party. However, the Department of Telecommunications (DoT) wants the AGR dues it feels it is owed by both companies – or possibly even by Reliance Jio and Bharti Airtel.

Both Jio and Airtel may or may not be found liable to pay some or all of RCom, Videocon and Aircel’s dues on the basis that Jio had spectrum sharing and trading pacts with RCom, while Airtel has had spectrum trading pacts with Videocon and Aircel. 

What happens next is unclear. Spectrum (or the right to use spectrum) can presumably not be transferred, assigned or sold under the terms of the Insolvency and Bankruptcy Code  until the Supreme Court gives the go-ahead.

The DoT meanwhile is seeking $1.67 billion from Aircel and a whopping $3.35 billion from RCom. With or without the spectrum sales, it’s not clear how the DoT can hope to collect all of these sums from the two companies.

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