It was going to happen sooner or later with debt mounting up, pressure from banks and lack of investment from parent company Maxis. We are talking about Indian telecom operator Aircel, which reportedly is filing for bankruptcy at the National Company Law Tribunal (NCLT).

As per a report from Economic Times, just ahead of the bankruptcy filing, Aircel’s board has been dissolved. Plans for a cash infusion by the telcos Malaysian parent company Maxis, which due to some reasons didn’t happen. Also, the negotiations with lenders since September failed to restructure its massive Rs 15,500 crore debt.

There is no cash to run the business and no visibility to free any more up” as per the report on ET. It’s even said that the telco is likely to stop paying salaries to its employees by the end of the week.

Aircel to file Bankruptcy at NCLT, No cash to run Telecom business

According to the report, the unexpected decision from Aircel came after Reserve Bank of India scrapping all debt revamp schemes in favour of the Insolvency and Bankruptcy Code and seeking for a quick resolution to debt cases. Aircel defaulted payments to banks since September (2017), thus banks can no longer restructure the telco without provisioning for its debt. The lenders are meeting in the coming days to decide on new board members and an insolvency professional to run the process.

Currently, Aircel is focusing on its better performing telecom circles, while completely stopped its network service in six non-performing telecom circles. The telco generates an average of Rs 400 crore in revenue. Out of this, more than Rs 280 crore is given to vendors and network management, whereas Rs 100 crore is given to other telcos for termination charges. But it seems, Aircel defaulted on this payments too, as recently Idea Cellular disconnected interconnect services with Aircel due to payment dues for more than three months. The rest of its revenue is being used for licence fees, taxes, and interest payments.

Much to its bad luck, Aircel’s merger with RCom collapsed due to delays in getting approval from courts and telecom authorities. This also caused Reliance Communications (RCom) to shut down its wireless business.

With Aircel’s future unknown, Indian telecom market is left with four main telco players (private) – Airtel, Vodafone India, Idea Cellular and Reliance Jio. Which will soon become three, after the Vodafone India and Idea Cellular merger.

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