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Reliance Seeks $300M in Arrears from Etisalat's India JV

  • Telcos' $2.2 billion, 10-year infrastructure agreement hangs in the balance due to non-payment of bills.Reliance Communications Ltd. has sought more than INR15 billion ($304.6 million) in arrears from the joint venture of Dubai's Emirates Telecommunications Corp. and India's Dynamix Balwas Group, a person familiar with the matter said Thursday.The person, who asked not to be named, told Dow Jones Newswires that Reliance sought INR12 billion as arrears for using its telecom towers under a 10-year deal which started in 2009 and more than INR3 billion under a pact to use the company's telecom network infrastructure.
  • Separately, the Anil Ambani-headed Reliance Group company approached India's telecom tribunal claiming INR12 billion from Etisalat DB Telecom Pvt. Ltd. as arrears for using its telecom towers. The Telecom Disputes Settlement and Appellate Tribunal asked Etisalat DB to respond within two weeks and set March 5 as the next date of hearing the case.
  • Officials at Etisalat or its India JV couldn't be reached for comments.Etisalat DB offers wireless phone services in 15 of India's 22 telecom service areas, and had 1.67 million users at the end of December. Late January, Reliance Communications had stopped Etisalat DB from using its towers due to non-payment of bills. Etisalat DB had then said its service was facing network disruption across India due to technical reasons beyond its control.
  • Late Wednesday, Etisalat said it will shut the India joint venture's operations, after the country's Supreme Court Feb. 2 ordered the cancellation of all mobile phone licenses issued after January 2008 on complaints of corruption. The order is effective after four months.Etisalat's decision meant also the cancellation of its technology outsourcing contract with India's Tech Mahindra Ltd., the CNBC-TV18 television channel reported Thursday.
  • Tech Mahindra said, however, it hasn't been officially informed of the decision and will discuss the matter with Etisalat.A local analyst said the contract was worth nearly $400 million, but included Etisalat's operations in India and the United Arab Emirates."A possible cancellation in India is unlikely to have a material impact on Tech Mahindra's financials," he said, adding that only about 10% of the company's more than $1 billion revenue comes from India, which indicates "very minimal" exposure to Etisalat.Tech Mahindra shares closed down 2.7% at INR614.05, lagging the 0.4% decline in the benchmark Sensex.

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