Aircel Files For Bankruptcy Amid Debt Of Rs 15,500 Crore
One of the known debt-ridden mobile service provider, Aircel, along with its two units applied to the Mumbai’s branch of National Companies Law Tribunal (NCLT) on Wednesday. This move has been initiated as the company owned by Malaysia-based Maxis has failed to move forward with its lenders and shareholders.
For a long time Aircel is facing severe financial crisis and are searching for various means to recover itself, including holding talks with lenders and stakeholders. As per the reports, Aircel has failed to find ways to restructure the debt of Rs 15,500 crore and generate proper funding as its parent company also backed off of inculcating funds into the firm under the Insolvency & Bankruptcy Code, 2016.
Know About Aircel Crisis
The Aircel group including Aircel and Dishnet Wireless Ltd had informed Telecom Regulatory Authority of India (TRAI) on 1 December 2017 that they want to surrender licenses in Uttar Pradesh (West), Gujarat, Maharashtra, Madhya Pradesh, Haryana and Himachal Pradesh. Later, it shut off services in these circles from 31 January.
Shutting down of Aircel would impact tower firms, vendors, distributors and 5000 employees associated with the operator, as per the report of Economic times. Moreover, in the starting of this year, Aircel closed offering its services in six circles to keep its focus on those who are performing well. After the entry of Reliance Jio in the market, Aircel is facing a hard time in increasing revenues and retaining customers. From a profit of Rs 120 crore in July 2016, the firm slipped to a loss of Rs 120 crore by December 2017.
The decision of Aircel to move to NCLT was incited by the Reserve Bank of India’s call to scrap debt modify schemes in favour of the Insolvency & Bankruptcy Code. “No agreement could be reached. Under current circumstances, especially after the 12 February 2018 RBI guidelines, the company believes resolution process under the Code is an appropriate recourse,” the company told to Economics Times.
Also, it had pending dues of Vodafone and Idea Cellular, ideas’ dues alone estimated around Rs 60 crore. The idea had already snapped interconnectivity ties with it, and Vodafone is planning to recover their contributions by following a suit, GTL, and ATC. Even, due to non-payment of dues, tower vendors too switched off some of its base stations causing a network problem and disturbance in the market.
Further, if NCLT looks into Aircel’s request, then an interim resolution professional would be appointed to look for funding and buyers to repay lenders within 270 days. In case they disagreed, the NCLT professional will declare a carrier bankrupt and sent into liquidation. NCLT is likely to hear the insolvency petition either on 6 March or 8 March. According to Live Mint’s report, “Once the NCLT application is filed, there is no guarantee of employees getting salaries, but the company will look at securing them.”
#aircel Dear users, I had seen that today morning,my Aircel sim received Vodafone network.This clearly seems that All the Aircel network will be replaced by Vodafone soon!#AircelBlackOut pic.twitter.com/LyYHNly1Wv
— Raghul (@imraghul24) February 22, 2018
Today #Aircel sent a message"Dear Customer, the rumour about Aircel closing down operations is completely untrue and false. We continue to provide services as usual." For the past 1 month pathetic network coverage and no resolution insight. Is that your service as usual Aircel
— Roshan Gowri D (@frostedsoul) February 21, 2018
To express the trouble caused due to poor network, Aircel users across the country took to social media platforms like Twitter and Facebook. Also, thousands of its customers have been trying to port their numbers and leave Aircel under severe stress. Notably, it is not just Aircel who is facing the brunt of Reliance Jio’s telecom foray as Reliance communications had already shut its operations and it is currently selling its wireless assets to Jio. A few others telecom firms like Idea and Vodafone, and Norway-based Telenor and Vodafone have merged their operations after facing a major drop in revenues.