Gurugram-based telecom major Aircel filed for bankruptcy on Wednesday, after reaching a consensus with lenders and shareholders, and determining that process under the Insolvency and Bankruptcy Code is an “appropriate recourse.” Founded way back in 1999, Aircel is the sixth largest mobile service provider in India with a subscriber base more than 84 million as of December-17. Notably, Aircel is considered to be market leader in Tamil Nadu and has significant presence in Odisha, Assam and North-East telecom circles.

Interestingly, founded by Chinnakannan Sivasankaran in 1999, the company was soon taken over by Malaysian telecom company Maxis Communications, after the Malaysian firm bought a 74% stake in the company from Sivasankaran in 2005. We take a look at three key reasons behind Aircel’s bankruptcy.

Unsustainable Debt

In an official statement on Wednesday, Aircel said that it was “facing troubled times in highly financially stressed industry.” The company says that it has suffered significant negative business and reputational impact due to unsustainable debt and increased losses. The company had debt of over Rs 15,000 crore as of December-17. The statement goes on to say that post detailed discussions with the financial lenders and shareholders, Aircel was unable to reach consensus with respect to the restructuring of its debt and funding.

Intense competition

In the statement, Aircel acknowledged that in an already financially stressed industry, Aircel was facing financial stress owing to intense competition, especially after the entry of a new player, legal and regulatory challenges, high level of unsustainable debt and increased losses. “This has caused significant negative business and reputational impact on the Company,” the statement said.

Failed merger of wireless business

Aircel says that its efforts to merge the wireless business with another player and fell through and ultimately lapsed in September 2017. According to the company’s statement, despite these discussions and the invoking of a Strategic Debt Restructuring scheme in January 2018…no agreement could be reached, Aircel said. Aircel says that the CIRP is not a proceeding for liquidation, rather it should b e seen as a process to find the best possible solution for the keeping the best interests of vendors, distributors and employees employees, and to protect and preserve the value of the company and manage the operations.