Reliance, Ericsson Tussle over Dues, Entangling Jio Deal

The travails of India’s embattled Reliance Communications just keep getting messier. Late last week, the National Company Law Tribunal (NCLT) handed the Swedish vendor Ericsson a victory, admitting its petition and appointing managers to run RCom, Reliance Telecom, and Reliance Infratel. The two companies are said to be trying to work out a deal outside of court, and RCom has filed an appeal.

Apparently, RCom owes Ericsson some $170M for the operations of its networks. Five years ago, Ericsson won an outsourcing contract to run Reliance’s network across 11 of the country’s telecom circles in the North and West of India. It was a decision that thoroughly entangled them in the ongoing soap opera, and apparently they have not been paid for equipment or services for some two years.  Negotiations are for a fraction of what Ericsson says it is owed, but exactly what fraction they can actually extract is as yet unclear.

Earlier this Spring, RCom announced plans to sell its wireless business and other assets to Reliance Jio in a bid to solve its debt issues. Meanwhile, other involved parties such as Russia Sistema have been kicking the tires of the rest of the company’s assets, including the international arm GCX at one point. However, Ericsson’s move may put everything on hold if the two don’t make peace.

One gets the impression that all this is far more drama than any of the international players involved bargained for when entering the Indian telecommunications marketplace. What a mess… As for GCX, the company is said to be walled off from the immediate effects of all of this.  But who knows what the future might hold at this point.

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