Aircel files for bankruptcy and tech vendors wait for payments

Aircel 3G networkTelecom equipment makers, including telecom tower company GTL Infrastructure, are facing challenges in recovering payments from telecom operator Aircel that has filed for bankruptcy due to poor financial conditions.

Aircel, according to data available with TRAI, has generated a gross revenue of Rs 2,011 crore in the quarter ended December 31, 2017.

Aircel, a Maxis company, has already closed the telecom services in circles such as Gujarat, Haryana, Himachal Pradesh, Madhya Pradesh, Maharashtra and Uttar Pradesh (West) with effect from 31st January, 2018.

Aircel’s wireless customers are facing disruption of services in the remaining service areas such as Andhra Pradesh, Assam, Bihar, Delhi, Jammu & Kashmir, Karnataka, Kerala, Kolkata, Mumbai, North East, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh (East) and West Bengal.

Aircel CEO Kaizad Heerjee in a letter to TRAI said that its major telecom tower provider GTL Infra has turned off as much as one third of their total sites in different licensed service areas across the country due to payment delay.
Aircel revenue in Q4 2017Aircel in a media statement said that intense competition following the disruptive entry of Reliance Jio, legal and regulatory challenges, high level of unsustainable debt and increased losses had caused significant negative business and reputational impact on the telecom venture of Maxis.

Aircel tried to merge with Reliance Communications in order to sustain the business for long. Apparently, Reliance Communications closed its 2G and 3G voice business and focused only on 4G data in order to reduce its loss from telecom voice business.

Aircel said it could not reach consensus with respect to restructuring of its debt and funding post detailed discussions with the financial lenders and shareholders. Aircel could reach a deal with lenders despite these discussions and the invoking of a Strategic Debt Restructuring scheme in January 2018.

The company believes resolution process under the Insolvency and Bankruptcy Code is an appropriate recourse in the current circumstances.

Aircel said CIRP is not a proceeding for liquidation, rather is a process to find best possible resolution for the current situation and that would be in the best interest of everyone (vendors, distributors, employees, etc) to protect and preserve the value of the company and manage the operations.

Aircel never disclosed its capital expenditure (capex) programs in India. It has invested in 2G, 3G and limited 4G networks.

Following the entry of Reliance Jio, mobile operators such as Reliance Communications, Telenor, Videocon, Aircel and Tata Teleservices have closed down / reduced their business in India.