Aircel files for bankruptcy, says it faced troubles after entry of a 'new player'

Facing troubles after Reliance Jio's entry in the telecom sector, Aircel on Wednesday said it has filed an application under the Insolvency and Bankruptcy Code (IBC) for undertaking Corporate Insolvency Resolution Process (CIRP) of Aircel Cellular Limited, Dishnet Wireless Limited and Aircel Limited.

The telecom operator said it was facing troubles due to intense competition after the 'disruptive entry of a new player' in a highly financially stressed industry. Aircel has also blamed legal and regulatory challenges, high level of unsustainable debt and increased losses.

 

In a statement, Aircel said it could not reach consensus with respect to debt restructuring, and under the current circumstances the resolution process under the insolvency code is an appropriate recourse.

Giving some consolation to its subscribers, Aircel said it would like to communicate to all the customers that it would 'strive hard to provide uninterrupted service connectivity' and called for their support in this difficult period.

Aircel has been in the news for the past couple of days due to its financial issues. A few days earlier, reports also emerged about how the telecom operator warned its employees of difficult times ahead. Aircel customers from Tamil Nadu and the Northeast, especially Assam took to social media to complain about its interrupted services.

Some customers even laid siege to some of its outlets in Coimbatore following rumours about closure of its service. A company official clarified the network service provider was facing some issues and they were trying to resolve it. According to some of the customers they were neither able to make a call nor receive and they termed it as the first step towards total closure of services.

Commenting on its planned merger with Reliance Communications which was called off later, Aircel said in an effort to proactively undertake the first mobile industry consolidation, it embarked upon a merger of its wireless business with another operator. However, on account of various issues and hurdles faced, the merger did not succeed and ultimately lapsed in September 2017.

"Post detailed discussions with the financial lenders and shareholders, the company could not reach consensus with respect to restructuring of its debt and funding. Despite these discussions and the invoking of a Strategic Debt Restructuring scheme in January 2018...no agreement could be reached," Aircel said.