RCOM: DoT Invokes Bank Guarantees Worth ₹801.91 Crore for Spectrum Dues
RCOM disclosed that the Department of Telecommunications (DoT) has invoked Financial Bank Guarantees (FBGs) totaling approximately ₹801.91 crore. These guarantees were furnished by Yes Bank, Punjab National Bank, Canara Bank, and State Bank of India for deferred spectrum payment obligations. RCOM is assessing the financial and legal implications.
The invocation of bank guarantees amounting to over ₹800 crore is a significant financial event for RCOM, directly impacting its financial obligations and ongoing insolvency resolution process.
The invocation of bank guarantees by the DoT for spectrum dues indicates a negative financial development for RCOM, potentially increasing its liabilities and impacting its ongoing resolution process.
Reliance Communications Limited (RCOM) has received communications from the Department of Telecommunications (DoT) regarding the invocation and encashment of Financial Bank Guarantees (FBGs) furnished by various banks on behalf of RCOM. These FBGs were provided as security for deferred spectrum payment obligations.
The DoT has stated that certain deferred annual spectrum installments remained unpaid, leading to the invocation of these FBGs. The invocation relates to spectrum acquired in various auctions.
Specifically, DoT has invoked/encashed FBGs issued by Yes Bank Limited aggregating to ₹281.45 crore for the 2013 spectrum auction. For the 2015 and 2016 spectrum auctions, Punjab National Bank's FBGs amounting to ₹114.09 crore have been invoked. Canara Bank's FBGs totaling ₹157.08 crore for the 2015 spectrum auction, and State Bank of India's FBGs amounting to ₹249.29 crore for the 2014 and 2015 spectrum auctions have also been invoked.
The aggregate amount of the FBGs invoked/encashed is approximately ₹801.91 crore. RCOM is currently examining the detailed financial and legal implications of these invocations, including the consequential impact on the company's liabilities and claims related to the spectrum payment obligations. The company stated that it will take further steps as deemed appropriate in accordance with applicable law and the ongoing Corporate Insolvency Resolution Process (CIRP). Further developments will be disclosed to the stock exchanges.
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