Reliance Communications shares jump 50% on Ericcson settlement talks

Reliance Communications stock falls up to 20% after NCLT admits Ericsson's insolvency petition against telco

Reliance Communications stock falls up to 20% after NCLT admits Ericsson's insolvency petition against telco

On BSE, the stock spurted to Rs 15.65.

The scrip had tanked over 15 per cent on Wednesday after NCLT admitted an insolvency petition filed by Ericsson against the company and two of its subsidiaries.

The tribunal's dedicated bankruptcy court has admitted the three petitions almost eight months after Ericsson filed an NCLT plea seeking to recover 11.5 billion rupees ($169.5 million) in unpaid dues, the Economic Times reported. RCom shares have fallen over 65 per cent this year as of Tuesday's close, compared with Bharti Airtel's 27.9 per cent fall and Idea Cellular's 51 per cent drop during the same period.

Ericsson has sought Rs 1154 crore from RCom and two of its arms Reliance Telecom Ltd and Reliance Infratel Ltd., after having signed a seven-year deal in 2014 to operate and manage RCom's nationwide network. The Tribunal had admitted the petition yesterday which could potentially result in delaying RCom's plans to sell assets to lighten its debt load.

The company's m-cap declined Rs 525.36 crore to Rs 2,917.64 crore.

RCom owes around Rs 45,000 crore to as many as 31 domestic and global banks, including over Rs 10,000 crore to a Chinese lender.

The court order sets back RCom's planned sale of airwaves, towers and fibre assets to Reliance Jio, the phone company owned by Ambani's older brother Mukesh, who is India's richest man.

A lawyer for RCom said it would appeal.

The company shut down its consumer mobile business late a year ago unable to survive the aggressive pricing strategy adopted by Reliance Jio which offered free voice and undercut the prices of data plans. However, the company refused to comment on the matter saying that its next move will be dictated after studying the court order carefully.

In December 2017, Reliance Jio agreed to buy a majority of the wireless assets of RCom for an undisclosed amount.

Latest News