RCom soars on buzz of out-of-court settlement with Ericsson

Reliance Communications surged 40.28% to Rs 14.80 at 14:14 IST on BSE after news reports suggested that the company is in talks with Swedish telecom firm Ericsson for settlement.

Meanwhile, the S&P BSE Sensex was down 120.38 points, or 0.34% to 35,267.50.

On the BSE, 3.86 crore shares were traded in the counter so far compared with average daily volumes of 87.73 lakh shares in the past two weeks. The stock had hit a high of Rs 15.65 and a low of Rs 10.05 so far during the day. The stock hit a 52-week high of Rs 41.77 on 29 December 2017. The stock hit a record low of Rs 9.60 on 15 November 2017.

According to media reports, Reliance Communications (RCom) and Ericsson will inform the Mumbai bench of the National Company Law Tribunal (NCLT) they are in settlement talks. This news provides some hope that RCom could avoid insolvency proceedings. Insolvency proceedings would put a hold on any asset sales by RCom.

RCom clarified after market hours on 15 May 2018, that the company and two of its subsidiaries Reliance Telecom and Reliance Infratel, await the detailed orders of the National Company Law Tribunal (NCLT), Mumbai, allowing the Ericsson application for admitting the companies to debt resolution under IBC.

Ericsson has reportedly sought Rs 1154 crore from RCom and two of its arms after having signed a seven-year deal in 2014 to operate and manage RCom's nationwide network.

In December 2017, Reliance Jio agreed to buy a majority of the wireless assets of RCom for an undisclosed amount. Both companies signed agreements for sale of wireless spectrum, tower, optical fibre network and media convergence node assets.

On a consolidated basis, RCom reported net loss of Rs 113 crore in Q3 December 2017 as against net loss of Rs 488 crore in Q3 December 2016. Net sales declined 31.70% to Rs 1144 crore in Q3 December 2017 over Q3 December 2016.

RCom has established a pan-India, next-generation, digital network that is capable of supporting best-of-class services spanning the entire communications value chain.

Powered by Capital Market - Live News