Beleaguered telecom operator Aircel, which is looking at ways to stay afloat, is pinning its hopes on the release of bank guarantees worth ₹751 crore to help it operate as a going concern and pay salaries to its nearly 3,000 employees.
The bank guarantees, if received soon, will be the lifeblood to continue operations for another 4-6 months.
The Department of Telecommunications (DoT) is holding about ₹751 crore as bank guarantees submitted when Aircel transferred its Broadband and Wireless Access (BWA) spectrum to Bharti Airtel, sources close to the development told BusinessLine.
In April 2016, Aircel transferred its BWA spectrum to Airtel. However, Aircel had to pay DoT ₹298 crore in cash and ₹453 crore in bank guarantees (totalling ₹751 crore) as a pre-condition for clearing the spectrum transfer. These were arranged by Airtel, which deducted the same from the consideration price.
Aircel had contested DoT’s demand for ₹751 crore before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which in a January 9, 2018, order directed that the bank guarantees be released within four weeks. TDSAT permitted DoT to retain ₹298 crore till another issue was settled.
Later, on February 27, Aircel filed for bankruptcy protection with the National Company Law Tribunal (NCLT) in Mumbai, after its Malaysian promoter, Maxis Communications, decided against pumping additional funds into the company. Following the filing, DoT — which had not released the funds till then — decided to invoke all the bank guarantees. Aircel then moved TDSAT, which rejected the case on April 23, prompting the operator to move the Supreme Court. While DoT withdrew its letter seeking to invoke ₹453 crore bank guarantees, on May 15, the Supreme Court admitted Aircel’s appeal for a refund of ₹298 crore.
An email sent to Aircel did not elicit any reply as of going to press on Wednesday.
In April, Maxis Communications infused an additional ₹95 crore in Aircel to enable the telecom operator pay salaries and meet certain expenses. The move, which was more of a goodwill gesture than an investment, came after the Malaysian parent declined in February to provide any more funds.
According to the Insolvency and Bankruptcy Code (IBC), lenders will now have to sanction additional “working capital loans” to ensure that the company’s operations are not stalled. The lenders are yet to take a call on further infusion of funds.