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India's Aircel files for bankruptcy

As expected, Indian mobile operator Aircel Cellular Ltd. and its two units, Dishnet Wireless Ltd. and Aircel Ltd., have filed for bankruptcy.

The company filed an application under Section 10 of the Insolvency and Bankruptcy Code 2016 for undertaking the corporate insolvency resolution process. Aircel said the filing is not a proceeding for liquidation, but a process to find the "best possible resolution for the current situation."

Aircel said Feb. 28 that its 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."

The bankruptcy application follows Aircel's Malaysian parent Maxis Bhd. reportedly backing out of plans to invest up to US$1.1 billion in the debt-laden company, supposedly to help restructure debt worth 155 billion Indian rupees.

Aircel also explored a merger with Reliance Communications Ltd., but the companies terminated the deal "by mutual consent" due to "inordinate delays caused by legal and regulatory uncertainties," among other reasons.

The 5,000 employees expected to be impacted by Aircel's demise are now preparing for the possibility of being laid off.

Amid the bankruptcy filing, Aircel is requesting "continued services" from suppliers and partners for the "ongoing business of the company." The Indian telco also added that it would "strive hard" to provide uninterrupted service connectivity to customers.

As of Feb. 28, US$1 was equivalent to 65.23 Indian rupees.