Reliance Communications shares jump 11%; here is why

The share price of Reliance Communications soared as much as 11% on stock exchanges today after the company replied to BSE in regards to Department of Telecommunications (DoT) action asking the Anil Ambani led firm to either give bank guarantee or lose licences. Things have been bleak for RCom since the time it started recording losses and underwent shortage of funds in order to repay its debt. 

At around 12:17 hours, share price of RCom was trading at Rs 14.46 per piece above Rs 0.81 or 5.93%. However, in first few hours of trading session, the company has gained by nearly 10.91% by touching intraday high of Rs 15.14 per piece. 

An Economic Times report had earlier mentioned that the DoT has told Reliance Communications its licences will be cancelled unless it pays Rs 774 crore in bank guarantees towards upcoming spectrum payment dues, effectively threatening the telco’s deal to sell its airwaves to Reliance Jio Infocomm. 

After being asked by exchanges, RCom in a notification accepted the matter, however, also highlighted that they have taken the issue before Telecom Disputes Settlement & Appellate Tribunal (TDSAT). 

The case will be heard on August 10, 2018, till then it is being directed to the Department of Telecommunications not to take any action against the Company with regard to the above matter until such date. 

In the month of April, RCom revealed that the Company has to pay Rs 774.19 crore towards deferred spectrum installments as regards auctioned spectrum in relation to the appeal filed by the Company. The deadline to pay was given till May 02. 

However, RCom failed to do the needful, but reportedly agreed on furnishing the bank guarantee in four weeks or by end of July. 

RCom reportedly stated that DoT has held bank guarantees of about Rs 2,540 crore which the TDSAT had asked the department to return to the company. 

DoT, however, has stood its ground for the fresh bank guarantee, with officials saying the department intends to appeal the TDSAT ruling in the Supreme Court, as per ET report. 

RCom is sitting on debt of Rs 46,000 crore, and to pare it the company had to urgently sell its wireless assets to Jio for Rs 18,000 crore. 

Looking at the dispute between DoT and RCom, it feels like Anil Ambani will have to wait for more time in clearing its debt with the help of brother Mukesh Ambani’s telecom arm. 

For now, RCom has got a breather.