Billionaire T Ananda Krishnan’s Aircel, India’s sixth largest network operator with 85 million users, filed for bankruptcy with the National Company Law Tribunal (NCLT) today (28 February), Economic Times has reported.
Krishnan-owned Maxis had bought a majority stake in Aircel for $1 billion in 2005 and had accumulated debts to the tune of $6.7 billion by March 2016, last since the figure was publicly available.
"Post detailed discussions with the financial lenders and shareholders, the company could not reach consensus with respect to restructuring of its debt and funding.
Under current circumstances, especially after the 12 February 2018 RBI guidelines, the Company believes resolution process under the Code is an appropriate recourse," said the operator, referring to the Insolvency & Bankruptcy Code, 2016.
If the company’s request to be placed under a court-appointed insolvency resolution professional is granted, it’ll have as long as 270 days to work out a debt repayment procedure.
As the Indian telecom market consolidates, Aircel too had tried for an unsuccessful merger with Anil Ambani’s Reliance Communications in October last year. Reliance Communications has been bought out by Mukesh Ambani’s Reliance Jio since then.
The Indian telecom market has been highly competitive since the Jio’s entry in September 2016, and Aircel acknowledged it in a statement, "The Board of Directors acknowledged that it has been facing troubled times in a highly financially stressed industry, owing to intense competition following the disruptive entry of a new player, legal and regulatory challenges, high level of unsustainable debt and increased losses. This has caused significant negative business and reputational impact on the Company."