Ericsson's Indian subsidiary has filed insolvency petitions against Reliance Communications and two of its companies to recover unpaid dues, the Indian mobile operator said in a stock exchange filing on Wednesday.
The Swedish telecoms equipment maker, which signed a seven-year deal in 2014 to operate and manage Reliance Communications' nationwide network, is seeking a total of 11.55 billion rupees ($180 million) from the three companies, the filing said.
Reliance Communications said it planned to challenge the insolvency petitions. The filing said the Ericsson case would go before the National Company Law Tribunal, the designated court for bankruptcy cases in India, on Sept. 26.
"Ericsson has done this as a last resort in order to resolve an issue regarding debt that Reliance owes to Ericsson for services provided under a contract. As the legal process is ongoing, we don't have any further comments at this point," the Swedish company said.
The petitions come as the Indian phone company controlled by billionaire Anil Ambani races against time to seal deals to sell a stake in its tower assets to Canada's Brookfield and to merge its mobile services business with rival Aircel.
Reliance Communications reported its third quarterly loss in a row last month and is trying to find ways to cut its debt after creditors gave it a reprieve on loan repayments until the end of 2017.
The Brookfield and Aircel deals are expected to reduce its debt burden by 250 billion rupees. Ambani said at the time of the loan reprieve that he expected to complete the deals by September.
The company's losses are, in part, a result of competition from free voice and cut-price data plans offered by Reliance Jio Infocomm, the telecom start-up backed by Ambani's elder brother and India's richest man Mukesh Ambani.
Ericsson is aiming to recover 4.91 billion rupees from Reliance Communications, 5.35 billion from Reliance Infratel and 1.29 billion rupees from Reliance Telecom, the filing said.
Reliance Communications shares closed 4 percent lower on Wednesday before the filing was released, after local media reports said Ericsson had filed an insolvency plea.
India last year revamped its bankruptcy laws to help cut a record $150 billion in impaired bank loans. The rules allow financial as well as business creditors to trigger bankruptcy proceedings against a company which has defaulted on payments.
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