Reliance Communications (R-Com), the telecom arm of the Anil Ambani-led Reliance Group, has reached an out-of-court settlement with operational creditor Ericsson for Rs 550 crore. This was communicated to the National Company Law Appellate Tribunal (NCLAT) during court proceedings on Wednesday.

Along with the financial settlement announced with minority shareholders in R-Com’s telecom tower firm Reliance Infratel on May 29, 2018—including HSBC Daisy Investments—this paves the way for the telco’s Rs 18,000-crore deal with Reliance Jio.

The proceeds from the sale of R-Com’s telecom assets, including its telecom towers and optic fibre cable network, to Mukesh Ambani-led Reliance Jio will be used to pare R-Com’s debt of Rs 46,000 crore. The company has been working with lenders, led by State Bank of India, to reduce its leverage.

R-Com’s shares gained 9.52% on the BSE on Wednesday to close at Rs 17.50. The benchmark S&P BSE Sensex lost 0.12% to end at 34,906.11 points.

Swedish telecom network and services company Ericsson had dragged R-Com to the National Law Company Tribunal (NCLT), asking for the Indian firm to be admitted under the Insolvency and Bankruptcy Code (IBC) for debt resolution. Ericsson believed R-Com owed it at least Rs 1,300 crore for services rendered, penalty and interest.

The NCLT had admitted R-Com for proceedings under the IBC, but the company, supported by its lenders, had moved the NCLAT against the tribunal’s order.

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