Ericsson has initiated legal proceedings against Indian operator Reliance Communications (RCom), claiming that it is owed more than INR11.56 billion ($180 million) by the group and its subsidiaries.
The Swedish vendor described the action, which it has filed with India’s National Company Law Tribunal (NCLT), as a “last resort” to bring the dispute to a close. Ericsson claims to be owed INR4.91 billion by Reliance Communications, INR5.35 billion by its subsidiary Reliance Telecom, and INR1.29 billion by its tower arm Reliance Infratel. RCom has said it will fight against the action.
A statement read: “Ericsson can confirm that the company has filed an insolvency petition against Reliance Communications in the National Company Law Tribunal in India. Ericsson has done this as a last resort in order to resolve an issue regarding debt that Reliance owes to Ericsson for services provided under a contract. As the legal process is ongoing, we don’t have any further comments at this point.”
The action is a fresh challenge for Reliance Communications in already difficult times. Like many mobile operator’s in India, RCom’s mobile unit has faced fierce competition since firebrand newcomer Reliance Jio launched its mobile offering in September 2016. For the quarter ending in June 2017, RCom’s losses hit R12.2 billion.
RCom is addressing its debt by adapting, and a merger between it and fellow operator Aircel is currently underway. In addition, it signed an agreement earlier this year to sell 51% of its tower unit to Canadian investment firm Brookfield.
The NCLT has adjourned Ericsson’s case until 26th September.