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Reliance Communications Finally Pays Ericsson Its Dues

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Ericsson collects about $87 million

Ericsson (ERIC) has finally received its long-delayed dues from struggling Indian telecom operator Reliance Communications (or RCom), according to a report from the Economic Times. Ericsson received about $87 million from RCom, consisting of about an $83 million debt payment plus interest.

Ericsson was previously scheduled to receive the payment before the end of last September. But the payment bounced, forcing Ericsson to escalate its case in India’s judicial system by seeking help from the country’s top court. Last month, the court ordered RCom to release Ericsson’s dues in a few weeks or risk having its leaders jailed. The jail threat appeared to have worked in Ericsson’s favor.

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A boost to Ericsson’s cash piles

Ericsson ended 2018 with about $3.8 billion in cash compared to $7.2 billion for Nokia (NOK). The payment from RCom is expected to boost Ericsson’s war chest and accord it greater financial flexibility as it continues to invest in product development as it eyes the 5G market.

Ericsson is chasing 5G contracts alongside Nokia and Samsung (SSNLF), among others. Since last year, Ericsson has secured 5G contracts from operators including T-Mobile (TMUS), US Cellular (USM), and Korea Telecom. T-Mobile handed Ericsson a multiyear 5G deal worth $3.5 billion last year. Ericsson is also working with Verizon (VZ) and AT&T (T) in their 5G network rollout. Verizon was the first to start providing 5G services in the United States last year, using Samsung equipment for its initial 5G network deployment.

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