SBI Writes To Department Of Telecom Seeking Relief For RCom
If DoT cancels spectrum allocation to Reliance Communications, it may jeopardize lenders’ attempts to recover dues
State Bank of India has appealed to the Department of Telecommunications not to revoke the spectrum alloted to Reliance Communications Ltd. and Reliance Telecom Ltd.
In a letter addressed to the DoT, SBI Chairman Rajnish Kumar has requested that the department reconsider its decision, as a banking consortium is trying to push for the sale of all of Reliance Communications' telecom businesses to Mukesh Amabani-owned Reliance Jio Infocomm Ltd.
BloombergQuint has reviewed a copy of the letter. When contacted, Kumar declined to comment on matters related to individual accounts.
The letter from SBI, dated July 23, points out that bankers are in the midst of an asset monetisation program after loans to Reliance Communications and Reliance Telecom turned into non-performing assets (NPAs). The asset monetisation process is being carried out under the supervision of an independent committee led by former Reserve Bank of India Deputy Governor, SS Mundra, the letter said.
The letter also points out that the proceeds from the sale would be used to repay Rs 45,000 crore in dues to lenders.
We understand that Department of Telecommunications is contemplating to exercise its powers to revoke the spectrum allocation to the above companies. We may submit that any such action will seriously jeopardize the efforts of the secured lenders to recover their dues.SBI Letter To DoT
Earlier this week, Reliance Communications Ltd. got a temporary reprieve from the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) till August 10 on the licence and spectrum cancellation showcause notice served on the company by DoT.
The decision of the DoT was prompted due to pending dues worth over Rs 700 crores from Reliance Communications in lieu of the spectrum allocated to the company in 2013 and 2015. On Monday, The Economic Times had first reported that the DoT had sought bank guarantees from Reliance Communications against these dues, failing which, the department would revoke the spectrum allocation.
Lenders to Reliance Communications had first decided to invoke strategic debt restructuring in June 2017, where a portion of the company's debt would have been converted into equity, allowing bankers to sell the company to another bidder.
However, the plan fell through after bankers and the borrower could not agree on the valuation at which the conversion should happen. Following this, the company proposed an asset monetisation plan, where lenders would not have to take any major haircuts.
In December 2017, it was announced that Reliance Jio would be buying the entire telecom operations of Reliance Communications.