Lenders, govt diverge on sale of spectrum with bankrupt telcos

Lenders to bankrupt Reliance Communications Ltd (RCom) and Reliance Telecom Ltd (RTL) have told the Supreme Court that spectrum is an essential and integral part of asset against which banks grant loans to telecom firms. This is contrary to the government’s stance that spectrum is national property and cannot be sold under insolvency proceedings.

In an intervention application filed by State Bank of India on behalf of the committee of creditors of RCom and RTL, the lender has sought protection of its rights and interest in the case of adjusted gross revenue (AGR)-related dues of telcos to the department of telecommunications (DoT). SBI, in the application dated 13 August, said spectrum is an asset of bankrupt telecom operators and removing this asset from the resolution process may threaten a company to not continue as a going concern.

SBI also clarified that the resolution under the Insolvency and Bankruptcy Code (IBC) does not seek transfer of spectrum to a new buyer but to have the right to use the airwaves.