The telecom company Aircel has been facing a financial stress due to the disruptive entry of new player in the competition. The legal and regulatory challenges, high level of unsustainable debt and increased losses have impacted the business and reputation of the company. The company is in debt of Rs 190 billion which include deferred spectrum payments. Aircel, majority owned by Malaysian company Maxis Communication told that due to the entry of Reliance Jio in September, 2016 telecom sector is facing intense competition due to low tariffs which lead to drop in profitability.
The company invoked Strategic Debt Restructuring Scheme of Reserve Bank of India [RBI] in January 2018 to win the confidence of shareholders and financial lenders but that the effort to reconstruct the debt and funding was failed.
The Aircel Limited along with Aircel Cellular Limited and Dishnet Wireless Limited has filed for bankruptcy under Section 10 of Insolvency and Bankruptcy Code, 2016 after the merger with Anil Ambani led Reliance Communications did no good to the business. The filing was made in National Company Law Tribunal [NCLT], Mumbai.
As per rules, Aircel will be placed under a court-appointed insolvency resolution professional, who will get 180 days that can be extended by another 90 days to work out a repayment plan. If no plan is agreed during the 270 day period, the company will be declared bankrupt and will be liquidated.
However, the company undertook that CIRP (Corporate Insolvency Resolution Process). The company has not proceeded for liquidation as the company considers it as the best solution for current difficulty. This would be the best in the interest of vendors, distributors, employees etc. It would protect the value of the company and manage the operations. According to the February 12 RBI Guidelines, Aircel believes that it has taken an appropriate recourse following the path of bankruptcy.
Aircel said that it will strive to provide uninterrupted service connectivity to its customers and sought the support from all its stakeholders, including the vendor fraternity and channel partners in the “current difficult period”.
The Telecom Regulatory Authority of India (TRAI) directed the operator in December, 2017 to shut the services in six circles comprising of Gujrat, Maharastra, Haryana, Himanchal Pradesh, Madhya Pradesh and Uttar Pradesh(West) due to financial problems. TRAI directed Aircel to generate Unique Porting Codes (UPCs) in its operational circles where a large number of subscribers are facing difficulties in porting their mobile numbers.
Aircel has over 85 million subscribers across 17 telecom circles, according to TRAI data.
