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Regular-article-logo Tuesday, 14 May 2024

Hughes Network Systems threatens closure

Closure could disrupt connectivity at over 70,000 banking locations and many critical satellite networks in the Indian navy, army and railways

Reuters New Delhi Published 23.02.20, 07:45 PM
Hughes’ India unit provides services to defence, education and banking sectors in the country and has told the telecom minister in a letter dated February 20 that it faces bankruptcy as it can’t pay the $84 million it owes.

Hughes’ India unit provides services to defence, education and banking sectors in the country and has told the telecom minister in a letter dated February 20 that it faces bankruptcy as it can’t pay the $84 million it owes. (Shutterstock)

US satellite broadband provider Hughes Network Systems may have to shut its Indian operations over unpaid levies owed to the government, which could put thousands of banking services at risk, a company letter seen by Reuters showed.

Hughes’ India unit provides services to defence, education and banking sectors in the country and has told the telecom minister in a letter dated February 20 that it faces bankruptcy as it can’t pay the $84 million it owes.

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The closure of the company could disrupt connectivity at more than 70,000 banking locations and many critical satellite networks in the Indian navy, army and railways, Hughes’ India president Partho Banerjee said in the letter.

“We are facing a huge demand... which by no means is serviceable by us and is in fact pushing our company towards bankruptcy & closure,” Banerjee wrote in the letter.

“This is an SOS request,” he added.

The company says the telecom department has made an incorrect calculation of the dues more than a decade ago which has ballooned to $84 million with interest and penalties.

Hughes, when approached by Reuters, would not comment on the substance of the letter but said in a statement it “remains committed to India” and would continue to provide services to its customers.

The telecom ministry did not respond to a request for comment.

While the $84 million Hughes owes is significantly smaller than the sum owed by the larger peers, a company document from December showed it was still more than three times its net worth in India.

“This, if not resolved, will make the operation unviable, thus rendering many customers such as banks, other enterprises and critical government networks without any connectivity,” the company said in a separate December letter to the government.

Hughes, which is part of US-based satellite group Echostar Corp, said in December 2018 it had been chosen to provide high-performance satellite broadband system for India’s naval communication network.

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