New Delhi: State Bank of India (SBI) has approached the Telecom Department asking it to reconsider any move to cancel Reliance Communications' spectrum as it would cause "irreparable harm" to lenders like itself and jeopardise their ongoing efforts to recover dues.
SBI and other lenders are engaging with the company to examine the possibility of reissuance or extension of the bank guarantees, as required by the Telecom Department, the bank said in a letter.
The move assumes significance as the debt-ridden Reliance Communications is under a temporary reprieve from telecom tribunal TDSAT till 10 August on licence and spectrum cancellation showcause notice served by the Department of Telecom (DoT).
The showcause notice has cast a cloud on the company's debt reduction plans that entails sale of spectrum and other telecom assets to Reliance Jio for about Rs 17,000 crore.
In a letter to Telecom Secretary Aruna Sundararajan, SBI Chairman Rajnish Kumar said that any action to revoke the spectrum allocation to Reliance Communications and Reliance Telecom would "seriously jeopardise the efforts of secured lenders to recover their dues".
A copy of the letter dated 23 July, 2018 has been seen by PTI , the same day the tribunal heard the matter and gave an order.
"As a matter of policy, bank doesn't respond on individual accounts," an SBI spokesperson said in an e-mailed response to a query on the issue.
According to the SBI letter, "The debt resolution plans and assets monetisation plans previously initiated by the secured lenders/company had not seen fruition. The proposed sale of spectrum and other assets appears to be viable chance of debt resolution for lenders including many public sector banks."
If the proposed sale does not proceed as a result of spectrum allocation being revoked by the Telecom Department, the "lenders may not be able to recover funds lent thereby causing irreparable harm to SBI and all other lenders in the consortium," SBI warned.
Urging the Telecom Department to reconsider the decision to initiate a coercive action such as spectrum cancellation, it said doing so would give lenders a shot at recovering debts owed by the two Reliance companies -- Reliance Communications and Reliance Telecom.
"In the meantime, the lenders including SBI are engaging with the companies to examine the possibility of re-issue/extending the bank guarantee subject of course to all due internal approvals of respective banks," the letter said.
Earlier this week, Reliance Communications received a relief, till 10 August, from the telecom tribunal on licence and spectrum cancellation showcause notice of Department of Telecom.
Posting the matter for directions on 10 August, the tribunal has instructed the respondent (Telecom Department) "not to give effect to the decision which it may take in the meantime".
The Anil Ambani-owned RCom had recently approached the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against the government's showcause notice on the spectrum and licence cancellation.
The company is learnt to have informed the TDSAT that while DoT has raised a demand for payment of Rs 774 crore on the company, the said payment has already been made to the government through encashment of previous bank guarantees or BG. Therefore, RCom contends it only needs to renew the encashed bank guarantees, which anyway will be payable only in March 2019.
In its petition, RCom said it had approached the tribunal in anticipation of DoT's move (on termination or revoking of licences and withdrawal of spectrum) given that thousands of jobs and millions of subscribers would be at stake.
RCom requested the TDSAT to set aside and quash the showcause notices dated 19 June, 2018 and 22 June, 2018 and "restrain" the Telecom Department from terminating or revoking the licences or revoking the spectrum held by the company.
RCom is under debt resolution process under the Insolvency and Bankruptcy Code, 2016 (IBC) and has not been paying any dues till the completion of the process.
RCom had said that if the deal with Reliance Jio goes through, the latter will take on deferred spectrum payment liabilities and any BGs given now by RCOM would anyway be replaced by the acquirer shortly.
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Updated Date: Jul 27, 2018 10:02:18 IST