One of the telecommunications industry’s biggest names in India has seen a bad month get worse this week, according to various reports. The billionaire Anil Ambani is facing potential jail time if Reliance Communications, of which he is chairman, fails to pay a chunk of the dues it owes Ericsson.
Earlier today, India’s Supreme Court ruled that RCom disobeyed a December order to pay 5.5B rupees ($77M) to Ericsson’s Indian unit. RCom had deposited 1B rupees with the court, but the other 4.5B is still outstanding. Ericsson won a contract to maintain RCom’s network in the country five years ago, but as RCom has spiraled downward financially they stopped paying for it. The sum in question is a small fraction of the 16B rupees that Ericsson is seeking to collect.
Now, with RCom filing for bankruptcy protection recently, things have just gotten messier. Ambani’s group has four weeks to pay the sum within four weeks or he faces a 3 month jail term. Speculation that other Reliance group companies would be tapped for cash then led to falling share prices for those companies as well.
It’s certainly a mess that I’m glad I don’t have to clean up. One wonders how much longer the soap opera will go on.
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