Reliance Communications and Reliance Jio have agreed to finalise their proposed asset sale deal by June even though the Indian government has refused to approve their anticipated spectrum trading agreement.
In a filing with the Bombay Stock Exchange, RCom said that it had “extended the validity of the agreements… for sale of towers, fibre, MCNs and spectrum of RCom, and its affiliates to 28 June 2019”, noting that it was in the process of procuring the approvals necessary for the deal to go ahead.
In an attempt to pay off some of its vast debt burden, RCom agreed in early 2018 to sell off some of its assets to Jio. However, last month the Department of Telecom (DoT) denied its approval after Jio attempted to avoid assuming responsibility for spectrum-related charges that RCom has accrued in the past.
The DoT argued that this would contravene spectrum trading guidelines and sought to make the payment of RCom’s dues a prerequisite for granting approval to the deal. RCom has filed a case against the spectrum charges, which could be as much as INR29.5 billion ($420.5 million), in a move seemingly intended to confirm that the deal could still go ahead.
However, Jio has stated that its purchase of the assets would be subject to “approvals from governmental and regulatory authorities, consents from all lenders, release of all encumbrances on the said assets and other conditions precedent”, underlining its opposition to taking on RCom’s spectrum charges.
This is the sticking point for the DoT, with a representative stating in December that “the ball is in [Jio’s] court… Till then, this deal is off the table”.