Displaying items by tag: Settlement
Swedish telecommunications giant Ericsson has called for the detainment of Anil Ambani, the chairman of Indian operator Reliance Communications (RCom) for its failure to pay the vendor a settlement fee of INR5.5bn ($78.5m) of unpaid service charges.
Ericsson was forced to file a second contempt of court proceeding against Reliance Communications when they failed to process the outstanding settlement charge. In addition to this, it was further disclosed that the vendor requested in the petition to the Supreme Court that the chairman of Reliance Communications should be barred from leaving the country and be detained in civil prison. It has also been reported that Ambani provided the Supreme Court with a personal guarantee.
However, RCom has also filed a case against the Department of Telecommunications (DoT) claiming that the delays in approving long-planned spectrum sales and auctions had prevented it from being able to pay Ericsson. The court will hear both cases on the 7th of January.
The former mobile operator missed the original payment deadline of 30 September, and then last month the high court rejected its plea to extend a 15 December deadline, which it had also missed. The earlier extension was granted by the court due to a delay in finalising the sale of its assets to Reliance Jio.
Twelve months ago, RCom brokered a deal with Jio to sell off assets including 800MHz spectrum to repay part of its huge debt. DoT later demanded payment of the dues as a condition for approving the agreement, but RCom is disputing the spectrum charge in court.
DoT last month rejected the spectrum deal on the grounds that it goes against trading guidelines after Jio sought assurances it won’t be held responsible for RCom’s past spectrum-related charges, which could total as much as INR29.5 billion.
Chinese telecommunications behemoth ZTE has seen its share price plummet by a whopping 39% following the resumption of its trading on the Hong Kong stock exchange. The Chinese vendor was able to resume trading after it reached a resolution agreement with the United States.
ZTE looked set to go out of business following the decision by the US Commerce Department to prohibit American companies from selling crucial hardware and software components to it for a period of seven years.
US officials implemented the ban after it claimed ZTE had failed to make the changes to its Board of Directors after being found guilty of trade violations with Iran and North Korea in 2016. However, following protracted negotiations between Beijing and Washington a settlement deal was finally reached which allowed ZTE to resume business in the United States.
The telecommunications colossus may have been saved but that didn’t stop its share price from nosediving by 39.22 to HK$15.56 during Hong Kong morning trade - while it also plunged by its 10 percent daily limit to 28.18 yuan in Shenzhen.
Fiscal analysts have predicted that whilst the nightmare for ZTE may be over with the US, the company will have to deal with the consequences of that saga for a significant period of time.
Analysts Edison Lee and Timothy Chau said, “While the nightmare is now over, ZTE will likely have to deal with many changes. We expect significant near-term selling pressure and a volatile stock price."
The ZTE crisis was a major issue during trade talks between the US and China, and the Trump administration were able to use that as leverage in the discussions. The ZTE settlement came just days after Beijing offered to increase purchases of US goods by $70bn in an effort to cut the yawning trade imbalance with the US.
It has been reported that Trump has demanded a $200 billion reduction in its trade deficit with China over two years.
“The US agreement with ZTE with fine and change of management, in other words, is a political deal," said analyst Dickie Wong at Kingston Securities. "If the US didn't 'free' ZTE in this way, US companies would find it very difficult in any moves in China, including decisions on mergers and acquisitions," Wong added.
Chinese telecom giants ZTE have received the largest criminal penalty in US history in relation to an export control case - following its admission that it violated the terms and conditions of US export controls in selling goods to both Iran and North Korea. ZTE pleaded guilty to the charges and the organization will immediately pay $892m - while another $300m in penalties will be suspended for a period of seven years. Some of the charges against ZTE included obstructing justice for hiding information from government investigators. The settlement reached between ZTE and US authorities is subject to court approval.
It emerged at the court case that from January 2010 to March 2016, ZTE shipped $32m in US cellular network equipment to Iran - and in addition to this made 283 shipments of cell phones to North Korea, with the full knowledge of the highest levels of company management. It was also disclosed that the company 'conspired to evade the long-standing and widely known US embargo against Iran' and conducted business with entities affiliated with Tehran to supply, build, operate and implement large scale telecommunications networks in the country whilst using US equipment and software.
The conclusion represents the end of a lengthy 5-year investigation by the US government into ZTE's activity and actions. The investigation was conducted under Barack Obama's presidency - but the outcome presents an opportunity for Donald Trump to flex his aggressive rhetoric on trade policy which was a consistent theme he used under the category of 'national security' on his campaign trail.
US commerce secretary, Wilbur Ross, said any countries that breach their export control laws will suffer the consequences and will not go unpunished. He said: "We are putting the world on notice: the games are over. Those who flout our economic sanctions and export control laws will not go unpunished -they will suffer the harshest of consequences. Under President Trump's leadership, we will be aggressively enforcing strong trade policies with the dual purpose of protecting American national security and protecting American workers."
ZTE issued a statement in relation to the settlement and acknowledged that it had made mistakes and was fully willing to take responsibility for their actions. Chairman and CEO of ZTE,
Dr. Zhao Xianming said: "ZTE acknowledges the mistakes it made, accepts responsibility for them, and remains committed to positive change in the company." He added that ZTE had made alterations to its personnel in order to eradicate the wrongdoings of a previous regime.
ZTE's CEO added: "Instituting new compliance focused features and making significant personnel changes has been a top priority for the company. We have learned many lessons from this experience and will continue on our path of becoming a model for export compliance and management excellence. We are committed to a new ZTE, compliant, healthy and trustworthy."
He concluded the statement by thanking customers, employees, stakeholders and partners for standing by them during this hugely difficult time for the organization. He said: "The agreements we reached will enable us to move forward in a stronger position than ever before. We are grateful to all our customers, partners, employees and stakeholders who have stood by us throughout this difficult time. With this agreement now behind us - we can confidently grow our business with suppliers, continue to provide innovate technology solutions to our partners, and execute our growth strategies as a new ZTE."