RCom shares fall 8% after DoT asks for Supreme Court nod for merger with Aircel
Mumbai: Shares of Reliance Communications Ltd (RCom) on Thursday lost 7.78%, its steepest fall in three months, after the Department of Telecommunications (DoT) asked the company to get Supreme Court clearance for its merger with Aircel Ltd.
The stock hit a low of Rs22.90 before it closed 7.78% lower at Rs23.10 on BSE
The fall in RCom shares was accentuated by a sharp fall in the prices of its 6.5% $300 million bond due in 2020. At 11.03am, its bond hit a record low of 63.33 cents in Hong Kong, down 1 cent from its previous close, according to Bloomberg data. The bond fell 12 out of 14 sessions and declined 900 basis points in this period.
DoT filed an affidavit before the National Company Law Tribunal, saying the apex court had restrained Aircel Ltd from selling and trading 2G spectrum allotted to it in 2006 in a 6 January order, Mint reported.
The Supreme Court order also said that it may cancel Aircel’s use of 2G licences if Malaysian businessman T. Ananda Krishnan of Maxis Group continued to avoid appearing before Indian courts in a case connected with irregularities in grant of 2G spectrum licences, the Mint report added.
Investors continued to sell the stock since the beginning of this year amid mounting concerns about its debt after rating agencies Fitch and Icra downgraded its debt ratings to default.
The merger with Aircel is crucial for RCom to reduce debt on its books at a time when new entrant Reliance Jio Infocomm Ltd is squeezing incumbents’ profitability. RCom had a debt of Rs42,802 crore on its books at the end of December.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.