Cut-throat competition in telecom sector claims a victim: Aircel files for bankruptcy


Telecom firm Aircel has filed for bankruptcy under Section 10 of the Insolvency and Bankruptcy Code, 2016 with the National Company Law Tribunal (NCLT) in Mumbai last Wednesday.

The telecom operator is said to be troubled since Reliance Jio’s extravagant entry into the Indian telecom market. Aircel cites unsustainable debt, price wars, legal challenges and massive losses resulting in bankruptcy. The company acknowledged that it had been facing troubles in a highly competitive market and financially stressed industry.

Aircel Bankruptcy: It went haywire after Reliance called off merger

Aircel started losing its grip over the market back in October 2017 when Reliance Communications Limited pulled off the plug on a plan to merge its wireless business with the company. The telecom group had approached the Telecom Regulatory Authority of India (TRAI) on December 1, 2017, with a request to surrender licences in Maharashtra, Himachal Pradesh, Haryana, Uttar Pradesh (West), Gujarat, and Madhya Pradesh.

This was followed by a complete shut down of services in these areas from January 31. Aircel had stopped its services in what constitutes one-third of its circles all across the country by February 22. The Telecom Regulatory Authority of India (TRAI) granted the company porting code and bought them additional time for their users to switch to a different network.

Aircel Bankruptcy: When do they liquidate assets?

Not anytime soon. Aircel is not planning on proceeding with a liquidation. If National Company Law Tribunal (NCLT) entertains its request, allowing the company to be assessed under a court-appointed insolvency resolution professional who buys a time period of around 270 days which should be enough for them to come up with a plan to repay lenders. In case of a failure, the company will be declared bankrupt and will automatically go into liquidation.

Aircel owned spectrum in the 900MHz, 1800MHz and 2100MHz bands, respectively. After surrendering the spectrum to DoT (Department of Telecom), it is not entitled to get back its share of the money. With a massive loss of approximately Rs. 120 crore for a quarter and 80 million subscribers, Aircel hits rock bottom.

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