India’s Reliance Communications (RCom) on Wednesday reached a settlement with Ericsson and agreed to pay part of the dues owed to the Swedish company by the end of September, potentially clearing the way for RCom to sell assets and trim debt.
An Indian appeals tribunal in New Delhi put on hold insolvency proceedings against RCom as part of the settlement and asked it to pay Ericsson 5.5 billion rupees ($81.5 million) by the end of September.
The settlement potentially paves the way for the Anil Ambani-controlled telecoms operator to sell its wireless assets including mobile masts and airwaves to Reliance Jio Infocomm in a deal sources have said is worth $3.8 billion, reports Reuters.
Jio is the telecom venture of Reliance Industries, controlled by Ambani’s brother and India’s richest man Mukesh Ambani.
The National Company Law Appellate Tribunal also asked RCom and Ericsson to file an affidavit by June 7 stating that the two companies will abide by the settlement.
RCom had filed an appeal with the NCLAT after the National Company Law Tribunal earlier this month admitted an insolvency plea against the company filed by Ericsson.
Ericsson, which signed a seven-year deal in 2014 to operate and manage RCom’s nationwide telecom network, was seeking 11.55 billion rupees from the company and two of its subsidiaries.
On Tuesday, RCom said its unit Reliance Infratel had reached a settlement with its minority shareholders in relation to the sale of its tower and fiber assets.
With debt of 457.33 billion rupees at the end of March 2017, RCom is the most-leveraged listed telecoms carrier in India.
Like other established Indian telecoms firms, RCom has been hit by a fierce price war over the last year, especially after the entry of Reliance Jio, which offered free voice and cut-price data plans. It shut its mobile operations late last year.