Tower firms start switching off RCom over unpaid dues

Tower companies have started taking action against Reliance Communications Ltd for unpaid rentals, with most even refusing to honour service level agreements (SLAs) that require them to maintain the towers for over 99.5 per cent of the time, The Economic Times reports.

Tower companies aren't incurring any incremental cash expense to support the Rcom network, several people close to developments told the paper. Some of them have decided to shut diesel supplies to the network and let the towers run on the state power grid, and remain non-functional during power cuts.

They have even switched off towers where RCom is the only tenant, and service other technical issues only when needed for other tenants of the tower. Some are also taking legal action to recover their unpaid billed amounts.

The network of Anil Ambani's Reliance Communications runs partly on its own towers and partly on rented towers. Indus Towers, Bharti Infratel, American Tower Company and GTL Infrastructures are the main tower firms which rent tower space to RCom.

The telco is focusing on operating as a 4G-only operator, complemented by intra-circle roaming pacts with other telcos and spectrum sharing with Reliance Jio.

RCom, which recently scrapped its merger deal with Aircel, is facing a slump in revenue, mounting losses, a shrinking subscriber base and debt of nearly Rs47,000 crore. It owes GTL and its unit CNIL about Rs95 crore, said one of ET's sources.

''The recovery proceedings being sub judice, we would not like to comment,'' a company spokesman said.

RCom owes ATC and Bharti Infratel about Rs20-25 crore each but both firms did not respond to ET's emails. RCom did not respond to emailed queries.

''Earlier, they (RCom) would settle with a 3-month lag, now that gap is already up to 5 months, and even then, when they settle it is only in bits and pieces,'' said a tower company official.

Equipment vendor Ericsson has even filed a bankruptcy proceedings against the company to recover about Rs1,150 crore. It partly manages RCom's network and filed in its suit that payments were pending since January.

Meanwhile Tech Mahindra Ltd has filed three cases against RCom and two of its subsidiaries - Reliance Telecom Ltd and Reliance Big TV Ltd - in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, Mint reports (See: After Ericsson, Tech Mahindra files cases against RCom).

Bharti Infratel, ATC and GTL Infrastructure had opposed a merger between RCom and privately-held Aircel two months back in the National Company Law Tribunal (NCLT), asking who would take responsibility for their payments after the merger. However, when the court rejected their plea, they did not pursue the matter.

Last Sunday, RCom scrapped its merger proposal with Aircel (See: RCom calls off merger with Aircel as plan hits 'regulatory' wall ) and also said its tower stake sale deal with Canada's Brookfield will be reevaluated. The two deals would have helped RCom clear around 60 per cent of its debt.

In June, Rcom entered into a strategic debt restructuring under which it has only till December to find a solution after which lenders could initiate bankruptcy proceedings.

The telco is considering alternate plans which include sale of towers, fibre, spectrum, and real assets, which could generate over Rs25,000 crore that could be used to repay lenders