India's RCom pays Ericsson, says asset deal with Jio falls through

RCom calls off asset sale to Reliance Jio settles dues with Ericsson

Mukesh Ambani, chairman of Reliance Industries Ltd, has provided around Rs 450-crore bailout to younger brother Anil Ambani, potentially saving the chairman of the debt-laden telecom firm Reliance Communications Ltd (RCom) from a jail term in a case involving a payout to Swedish company Ericsson. "I and my family are grateful we have moved beyond the past, and are deeply touched with this gesture", he said in a brief statement issued through the company spokesperson.

RCom, which owes a total 5.71 billion rupees to Ericsson, including a one-time settlement of 5.5 billion rupees and interest payments of 210 million rupees, had already deposited 1.18 billion rupees with the Supreme Court in February.

Had he not paid Ericsson Ambani would have been held in contempt of court because it had been judged that he had the cash handy, but just felt like holding onto it. It extracted a personal guarantee from Ambani to pay the dues.

It is to be noted that Ericsson India had signed a seven-year deal in 2014 with Reliance Communication to operate and manage the telecom network of RCom across India.

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His companies endured a misfortune last week after a lower court denied to free up tax refunds withheld by lenders.

In a verdict that had come as a setback to Ambani, the court on February 20 had pulled up the industrialist for his "cavalier attitude" demonstrated through the affidavit filed in the court and said any "unconditional apology" given must be rejected. The highest court of India had also found his two directors guilty for not clearing its dues of Rs 550 crore to the Swedish company.

The court had set March 19 as the last date to make the payment and had threatened to send the accused to jail if the money was not paid.

Shares of Reliance Communications fell by nearly 10 per cent on India's Bombay Stock Exchange at the close of markets Monday, just the latest sharp dip.

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