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Indian billionaire Anil Ambani ordered to pay Ericsson or face jail

Supreme Court finds Reliance Communications chief guilty of contempt of court

Anil Ambani speaks during a news conference in Mumbai. India's Supreme Court ordered the executive to pay Ericsson 4.53 billion rupees after finding him guilty of contempt of court.   © Reuters

MUMBAI -- Anil Ambani, chairman of Reliance Communications, was on Wednesday ordered by India's Supreme Court to pay 4.53 billion rupees ($63.8 million) to Swedish equipment maker Ericsson within four weeks or go to jail, after the billionaire was found guilty of contempt of court.

The Supreme Court noted that three Reliance Group companies -- Reliance Communications, Reliance Infratel, and Reliance Telecom -- had had no intention of paying as ordered in October. Two other group directors, Reliance Telecom Chairman Satish Seth and Reliance Infratel Chairperson Chhaya Virani, were also found guilty of contempt of court.

The ruling is another blow to the younger sibling of India's richest man Mukesh Ambani, after his heavily leveraged company was forced to turn to the bankruptcy court to seek resolution of its debt. If he fails to pay on time he will be jailed for three months.

The ruling followed a claim by Ericsson for payment after a deal reached in 2014 to manage the Reliance Communications network. The Swedish company has claimed it is owed 5.5 billion rupees in unpaid fees.

In addition to the 4.53 billion rupee payment ordered by the court, the company was again ordered to deposit an additional 1.18 billion rupees in the Court Registry. Reliance Group companies were also fined 10 million rupees each and failure to pay would result in one-month imprisonment of their directors, the court ruled.

The order follows a number of lapses by Reliance Communications in following court orders. On Aug. 3, the Supreme Court had first directed the company to pay its dues by the end of September. Reliance Communications sought an extension, and a final deadline of Dec. 15 was set. A request for a second extension was made and subsequently withdrawn.

Ericsson then initiated contempt of court proceedings against Reliance Communications and Anil Ambani for violation of the orders.

In a stock exchange filing, a Reliance Communications spokesperson said: "We respect the Hon'ble Supreme Court judgment. The RCOM Group shall comply with same." Reliance Communications' shares fell 11% in intraday trading on the Mumbai stock exchanges after the verdict.

The company was once one of India's biggest telecoms operators but has been rocked by the entry of aggressive new players, including Reliance Jio, a telecom business run by his older brother.

Already heavily indebted, Reliance Communications has since lost a significant portion of its market share in the face of Jio's price-cutting. In 2017, it was forced to strike a deal with creditors on debt.

Several creditors, including Ericsson India, had sought to have Reliance Communications declared bankrupt, along with China Development Bank.

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