The State Bank of India (SBI)-led consortium of creditors has told the Supreme Court (SC) that spectrum is part of Reliance Communications' (RCom) assets and that its insolvency process would collapse if the right to use airwaves is not permitted to be transferred.
Countering the government's stand on ownership of spectrum, the Committee of Creditors (CoC), led by the SBI, of the beleaguered telecom operator stated that the spectrum is an "essential and integral" part of the telco's assets and is vital for its continuance as a going concern.
The state-owned lender further told the apex court that RCom cannot be transferred as a going concern as well in the absence of spectrum, as required by the Insolvency and Bankruptcy Code (IBC). SBI said it in an affidavit filed in the SC on Thursday, seeking to be made a party to the case, the Economic Times reported.
The lead bankers' appeal comes after the top court questioned the spectrum sale by bankrupt telcos Aircel and RCom and how the Centre plans to retrieve Rs 43,000 crore of these companies' adjusted gross revenue (AGR) dues if all their assets were sold in the interim period. The government is of the view that the spectrum cannot be sold under the insolvency process as it owns the airwaves.
The SBI expressed in the affidavit that the whole foundation of keeping the "corporate debtor as a going concern would be frustrated if it is held that the spectrum does not form a part of its assets for the purpose of a resolution plan."
The bank further articulated in the plea that "the resolution applicant whose plan is approved has necessarily taken into consideration the spectrum licence for the resolution of the corporate debtor without which the corporate debtor would be unable to function after being taken over by the resolution applicant."
RCom owes the government Rs 25,194.58 crore in AGR dues, comprising those of Sistema Shyam Teleservices worth Rs 222.1 crore, as it merged with the telco.
SBI told the SC that banks fork out loans to telcos basis their right to use the airwaves and that "lenders have lent huge sums of loans to telecom companies based on security created over the right to use the spectrum."
The bank highlighted that the corporate debtors (RCom in this case), don't want ownership of the airwaves but the right to use them. It also pointed out that RCom's resolution plan is in the interest of the Department of Telecommunications (DoT) as well.
The DoT had informed the SC that the spectrum cannot be sold without clearing government dues.