After failing to find a path forward with its shareholders and lenders, small private telecom company Aircel, along with its units has filed for bankruptcy in the National Companies Law Tribunal (NCLT), Mumbai on Wednesday.
Aircel had been struggling with severe financial crisis and was looking various options for the company, including holding talks with all stakeholders including lenders.
Owned by Malaysia-based Maxis, Aircel has a debt of Rs 15,500 crore and was unable to find a way to recast this. Making matters worse, its parent company also backed out of infusing funds into the struggling telecom player.
According to an Economic times report, Aircel shutting down will impact tower firms, vendors, distributors and 500 employees associated with the operator.
In January, Aircel shut its services in six circles to focus on its better performing ones.
Aircel is among the other telecom companies in India, which have been facing a tough time retaining customer, increasing revenues after Reliance Jio launched its services. From a quarterly operating profit of Rs 120 crore in July 2016, slipped to an operating loss of Rs 120 crore by December 2017.
It also had pending dues of Rs 60 crore with Idea Cellular, which snapped interconnectivity ties with it. Reports suggest that Vodafone is expected to follow suit and GTL and ATC have taken Aircel to courts to recover their dues.
Tower vendors too, switched off some of its base stations for non-payment of dues. As per some reports, Aircel is facing legal issues with one of the telecom tower companies due to non-payment of dues, because of which the network was cut by the tower company across India causing a network problem and mayhem in the market.
Its users across the country took to Facebook and Twitter to express their distress over lack of connectivity. Lakhs of customers have been trying to port their numbers amidst reports of the company facing financial distress.
Due to the extremely large volume of customer requests to port out, Aircelâ€™s infrastructure came under severe stress and it was not able to handle the increased load.
Aircel is not the only one to bear the brunt of Reliance jioâ€™s telecom foray. Reliance communications shut operations and is selling its wireless assets to Jio. Norway-based Telenor is merging operations with Airtel. Idea and Vodafone too, are in the process of merging operations after facing severe drop in revenues.