Tower companies pare service to RCom on rental defaults
, ET Bureau|
Updated: Oct 07, 2017, 12.06 AM IST
MUMBAI: Tower companies have started taking action against Reliance Communications for pending rentals, with most reneging on service level agreements (SLA) that mandate them to maintain the towers for over 99.5% of the time. Tower companies aren’t incurring incremental cash expense to support the RCom network, said several people close to developments.
Some have decided to shut diesel supplies to the network and let the towers run on power grid and remain power less during power cuts. They have even switched off towers where RCom is sole tenant and serviced other technical issues only when something similar was needed for other tenants on the tower. Some are also taking legal recourse to recover unpaid bills. “If we shut the tower, Rcom will not have a revenue source to pay us.
But we refuse to incur any further expense which uses our cash,” said a person close to developments. “We have just shut a part of the network,” said another. Anil Ambani’s flagship company’s network runs partly on its own towers and partly on rentals.
Indus Towers, Bharti Infratel, American Tower Company and GTL Infrastructures are the main firms which rent tower space to RCom. The telco is focusing on operating as a 4Gonly 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 Rs 47,000 crore. It owes GTL and its unit CNIL about Rs 95 crore, said one person.
“The recovery proceedings being subjudice, we would not like to comment,” said the company spokesman, but refused to validate the amount in question. Rcom owes ATC and Bharti Infratel about Rs 20-25 crore each but both firms did not respond to ET’s emails. RCom did not respond to emailed queries either. Another firm said towers on which RCom is the only tenant have been turned off, while shared ones are running but without uptime guarantee. Indus did not respond to emails either.
“Earlier, (RCom) would settle with a three-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 another official. 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), questioning who would take responsibility for their payments after the merger. However, when the court rejected their plea, they did not further pursue the matter.
“On a closer look, we thought the combine was going to be led by Aircel and felt more confident if we were to be paid by Aircel,” a senior official at one of the country’s top tower companies had said. RCom has scrapped its merger proposal with Aircel and said its tower stake sale deal with Canada’s Brookfield will be reevaluated. The two deals would have helped RCom clear around 60% of debt.
In June, RCom entered into a strategic debt restructuring, under which it has till December for a solution, after which lenders can initiate bankruptcy proceedings.
ET View: For a Streamlined M&A Policy
Call drops and poor-quality telecom services are wholly avoidable, for whatever reason. We do need proactive policy in place, so that tower companies can continue to function for telecom service providers pending resolution of payment issues. In its draft recommendations for ease of doing telecom business, Trai has called for provisions to speed up alliances. A streamlined mergers and acquisitions policy for telecom operators is also needed. It might even make sense to dip into the USO Fund so as not to suspend tower services even temporarily.
Some have decided to shut diesel supplies to the network and let the towers run on power grid and remain power less during power cuts. They have even switched off towers where RCom is sole tenant and serviced other technical issues only when something similar was needed for other tenants on the tower. Some are also taking legal recourse to recover unpaid bills. “If we shut the tower, Rcom will not have a revenue source to pay us.
But we refuse to incur any further expense which uses our cash,” said a person close to developments. “We have just shut a part of the network,” said another. Anil Ambani’s flagship company’s network runs partly on its own towers and partly on rentals.
Indus Towers, Bharti Infratel, American Tower Company and GTL Infrastructures are the main firms which rent tower space to RCom. The telco is focusing on operating as a 4Gonly 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 Rs 47,000 crore. It owes GTL and its unit CNIL about Rs 95 crore, said one person.
“The recovery proceedings being subjudice, we would not like to comment,” said the company spokesman, but refused to validate the amount in question. Rcom owes ATC and Bharti Infratel about Rs 20-25 crore each but both firms did not respond to ET’s emails. RCom did not respond to emailed queries either. Another firm said towers on which RCom is the only tenant have been turned off, while shared ones are running but without uptime guarantee. Indus did not respond to emails either.
“Earlier, (RCom) would settle with a three-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 another official. 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), questioning who would take responsibility for their payments after the merger. However, when the court rejected their plea, they did not further pursue the matter.
“On a closer look, we thought the combine was going to be led by Aircel and felt more confident if we were to be paid by Aircel,” a senior official at one of the country’s top tower companies had said. RCom has scrapped its merger proposal with Aircel and said its tower stake sale deal with Canada’s Brookfield will be reevaluated. The two deals would have helped RCom clear around 60% of debt.
In June, RCom entered into a strategic debt restructuring, under which it has till December for a solution, after which lenders can initiate bankruptcy proceedings.
ET View: For a Streamlined M&A Policy
Call drops and poor-quality telecom services are wholly avoidable, for whatever reason. We do need proactive policy in place, so that tower companies can continue to function for telecom service providers pending resolution of payment issues. In its draft recommendations for ease of doing telecom business, Trai has called for provisions to speed up alliances. A streamlined mergers and acquisitions policy for telecom operators is also needed. It might even make sense to dip into the USO Fund so as not to suspend tower services even temporarily.
