Embattled telecom company Reliance Communications Ltd faced another setback on Sunday after a deal to merge its wireless business with smaller rival Aircel was called off, raising fresh doubts around its debt restructuring plans.
The company, widely known as RCom, said it had agreed with Aircel to call off the proposed deal due to regulatory delays and legal uncertainties.
RCom has been trying to reduce its debt by 250 billion rupees by merging its wireless business with Aircel and by selling a stake in its mobile masts arm to a unit of Canada’s Brookfield Asset Management .
RCom’s net debt stood at 443.45 billion rupees ($6.92 billion) at the end of March. The company has earned a temporary reprieve from its lenders, which have agreed to a standstill on its debt obligations.
RCom said in a statement on Sunday it would look to monetize its spectrum through trading and sharing arrangements and continue to implement the monetization of its tower and fiber assets.
Controlled by billionaire Anil Ambani, RCom has been hit by free voice and cut-price data plans offered by the mobile market’s newest entrant, Reliance Jio Infocomm, the network operator backed by Ambani’s older brother and India’s richest man, Mukesh.
The collapse of the deal with Aircel comes after the local arm of Sweden’s Ericsson filed a plea with an insolvency court against RCom last month.
Ericsson, which signed a seven-year deal in 2014 to operate and manage RCom’s nationwide network, is seeking a total of 11.55 billion rupees from the company and two of its subsidiaries.