Indian tycoon Anil Ambani ruled in contempt for refusing to settle Ericsson debt
The ruling deals a new blow to Reliance Communications, whose shares have fallen 86% in the past three years
New Delhi — India’s top court told billionaire tycoon Anil Ambani on Wednesday he must pay his debts to Sweden’s Ericsson or go to jail, the latest twist in a saga that has brought his telecom company to its knees.
Ambani’s Reliance Communications owes about $4b after a brutal telecom price war with his brother Mukesh — India’s richest man.
Judges found Anil Ambani had refused to pay telecom giant Ericsson 5.5-billion rupees ($77m) as previously ordered by the Supreme Court.
They ruled the billionaire will be jailed for three months if 4.5-billion rupees are not stumped up within four weeks.
Ambani’s firm said it will comply with the ruling and pay the debt. About 1-billion rupees have already been deposited with the court, which said the sum will be handed to Ericsson.
But the ruling dealt a new blow to Reliance Communications shares which lost another 3.65% Wednesday on the Mumbai stock exchange.
The shares have now fallen 86% in the past three years — including a drop by more than a third after it filed for insolvency.
That move was started after Reliance Communications failed to sell assets to pay back lenders.
The dispute started when Ericsson sought to recoup 16 billion rupees from Reliance Communications. They reached a settlement last May, but the Indian company failed to meet payment deadlines.
Ambani had hoped to avoid insolvency proceedings by offloading his company’s telecom tower and spectrum business to his brother’s Reliance Jio for $2.4 billion. But the deal has hit regulatory hurdles and opposition from creditors.
Reliance Communications faces liquidation if it is unable to pay back its debts by November.
The Ambani brothers engaged in a bitter feud for control of Reliance Industries after their rags-to-riches father Dhirubhai Ambani died in 2002 without a will.
The pair ended up splitting the Reliance group, which was India’s most valuable listed company.