Tech Mahindra Files Insolvency Plea Against Reliance Communications
Tech Mahindra claims Rs 8.2 crore from Reliance Communications and two subsidiaries.
Tech Mahindra Ltd. has filed insolvency petitions against Anil Ambani's Reliance Communications Ltd. and two units, just days after its merger with Aircel Ltd. collapsed, putting focus back on the telecom operator's ability to repay its lenders.
The information technology services company has moved the Mumbai bench of the National Company Law Tribunal, claiming Rs 8.2 crore for unpaid bills for “services allegedly rendered” to Reliance Communications, Reliance Telecom and Reliance Big TV, the telecom operator said in a stock exchange filing.
“We submit that the petitions are misconceived, premature and motivated by extraneous conditions," the filing added.
Ambani’s debt-ridden telecom unit was dealt a blow earlier this week after its plan to merge with Aircel lapsed due to “legal uncertainties” and “interventions by vested interests.” The proposed deal along with a plan to sell stake in its tower business was crucial to Reliance Communications as it would have cut its outstanding Rs 45,733-crore debt by more than half.
Lenders, too, were banking on the deal to go through. They'd invoked strategic debt restructuring in June after multiple credit agencies downgraded Reliance Communications' debt to default for missing interest payments. The prospect of debt reduction from completion of the two deals had won Ambani a seven-month moratorium till December to repay debt.
Last month, Ericsson India, too, filed an insolvency plea under the Insolvency and Bankruptcy Code to recover Rs 491.4 crore from Reliance Communications. Additionally, it also filed petitions against Reliance Infratel and Reliance Telecom, for recovering Rs 534.7 and Rs 129.3 crore, respectively.
A “hyper competitive market” spurred by the free services offered by Reliance Jio Infocomm Ltd., owned by Anil Ambani’s older brother Mukesh Ambani, forced rivals to cut tariffs, hurting their financials in the six months to March. Reliance Communications was no exception, and posted two straight quarters of losses, resulting in a significant stress on its cash flow.
It plans to monetise its real estate assets, including 125 acres at Dhirubhai Ambani Knowledge City in Navi Mumbai, and four acres in Delhi to raise over to Rs 10,000 crore. The development agreements will be finalised in the next few weeks. It also plans to sell its tower and fibre assets as already announced.