RCom shares dip on insolvency plea

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

The stock after making a weak opening further tanked 20 percent to Rs 9.95 on BSE.

Like other incumbents in India's telecoms sector, RCom has been hit by a fierce price war over the previous year, especially after the entry of Reliance Jio, which offered free voice and cut-price data plans. Intra-day, it dropped 20 per cent to Rs 9.95.

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.

Ericsson had signed a seven-year deal in 2014 to operate and manage RCom's nationwide telecom network but has allegedly not been paid.

Earlier, Mint reported that the NCLT admitted a plea filed by Ericsson which has stalled RCom's plan to sell its assets to Reliance Jio Infocomm Ltd. RCom was seeking to reduce its $7 billion debt with this deal.

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With debt of Rs 45,733 crore ($6.7 billion) at the end of March 2017, RCom is the most-leveraged of all listed telecoms carriers in India. Due to mounting losses, the company began to wind down its mobile operations from last November. It was also not servicing the debt for many quarters before that as it was looking to recast the loans but the plans did not materialise.

This has prevented the company from closing sale of its telecom tower business to Anil Ambani's elder brother-run Reliance Industries for over Rs 23,000 crore, apart from monetising other assets including selling its sprawling DAKC premises to the Chinese lender and pares debt.

On Wednesday, HSBC Daisy Investment petition opposing the sale of the tower assets of Reliance Infratel the tower subsidiary of RCom came up for hearing in the Supreme Court but was adjourned for May 17.

RCom can appeal the verdict with a tribunal in New Delhi. However, the company refused to comment on the matter saying that its next move will be dictated after studying the court order carefully.

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