UV Asset Reconstruction Company Ltd (UVARCL) will initiate discussions to sell the spectrum held by beleaguered telecom operator Aircel, after putting a monitoring committee in place. The company also intends to pay ₹6,630 crore to Aircel’s lenders over the next five years.

The move comes after the National Company Law Tribunal (NCLT), Mumbai, approved UVARCL’s resolution plan for Aircel and permitted the company to transfer or sell spectrum.

“We are planning to monetise the spectrum and we will speak to prospective buyers. We are expecting a good value for the spectrum, and once we finalise a buyer we will seek the Department of Telecommunications’ (DoT) permissions for the sale,” UVARCL Chief Financial Officer Ritesh Aggarwal told BusinessLine in an interview.

“The adjudicating authority has approved the transaction of spectrum,” he said, adding the firm will set up a monitoring committee as early as Monday.

Aircel holds spectrum in 900 MHz, 1800 MHz and 2100 MHz bands across the Mumbai, Delhi, Karnataka, Andhra Pradesh, Rajasthan and Tamil Nadu circles, which will come up for renewal in 2026.

The Committee of Creditors (CoC) of Aircel had earlier sought permission for usage of spectrum by a buyer “free of any encumbrance”.

The telecom firm had filed for bankruptcy protection in 2018 after it failed to repay a debt of ₹20,000 crore. On June 18, the NCLT approved the resolution process submitted by UVARCL for Aircel and its subsidiaries Aircel Cellular and Dishnet Wireless.

Pursuant to the resolution plan, the lenders will get around ₹6,630 crore against their dues, with UVARCL (an asset reconstruction company) issuing Zero Coupon Optionally Convertible Debentures (ZOCDs) of ₹6,630 crore to the lenders. These ZOCDs will be redeemed over the next five years.

According to resolution plan approved by NCLT, the secured financial creditors will get 24 per cent equity, while the balance will be held by UVARCL.

Going concern

UVARCL will scale down operations and run defunct Aircel as a going concern, even as it intends to monetise the latter’s high-value assets.

“The plan is to run the companies — Aircel and Dishnet — as a going concern. We will run those low-capex businesses, which are viable and feasible to operate, and monetise assets that have higher sale value rather use value and utilise the money to repay the lenders,” Aggarwal said.

The ARC will run businesses such as bulk SMS, dark fibre, international bandwidth and leasing of towers, and look at monetising real estate. The company has 14,500 km of optical fibre, which can be leased out, while the ARC would operate international bandwidth business under Dishnet Wireless.

However, the final decision on which businesses are viable and which ones should be sold off would be taken by the management in consultation with the monitoring committee.

“We need RBI approvals to implement the plan as we are governed by the RBI. We will be seeking its approval soon,” he said.

On the real estate front, Aggarwal said that the value of the real estate Aircel has in prime locales has to be discovered. “The earlier valuation has changed now due to the Covid-19 situation,” he said.

However, the resolution plan will not see Aircel coming back as a telecom operator as it is not commercially viable due to the present market conditions. “It is impossible to rebuild the business at a time when other telecom companies are struggling to stay afloat,” he added.

List of lenders

State Bank of India has the biggest exposure of 36.6 per cent, followed by Punjab National Bank at 15.1 per cent, China Development Bank Corporation 13.7 per cent and Bank of Baroda 10.5 per cent. Canara Bank, Nordic Investment Bank, AB Svensk Exportkredit, Exim Bank and Syndicate Bank are the other lenders to Aircel.

Earlier this year, UVARCL had also submitted a resolution plan for Anil Ambani-controlled Reliance Communications (RCom), which was approved by the company’s CoC and is now awaiting NCLT’s approval.

“The plans for RCom would be different but I can’t talk about it at this point due to confidentiality issues,” Aggarwal added.

In April 2018, Maxis Communications infused an additional ₹95 crore in Aircel to enable the telecom operator pay salaries and meet certain expenses. The move — which was more of a goodwill gesture than an investment — came after the Malaysian parent declined in February 2018 to provide any more funds.