The Reliance Communications (RCom) stock fell over 13 percent in early trade today after the department of telecommunications (DoT) said it can't approve the deal to trade airwaves between Reliance Jio and the Anil Ambani-owned telco as it does not conform to its guidelines.
The Reliance Communications stock plunged 13.33% on the NSE to hit an intra day low of 13.65 level. On BSE, the stock fell 12.74% to 13.77 level compared to the previous close of 15.78.
The small cap stock opened at a loss of 8.11% on the BSE. RCom shares closed at Rs 15.78, up 0.77%, on the BSE on Tuesday.
The stock has lost 60% since the beginning of this year and gained 14.72% during the last one year.
The DoT stance is a big blow to the Anil Ambani-owned telco's efforts to repay creditors and avoid insolvency proceedings.
According to a report in The Economic Times, Mukesh Ambani-owned Reliance Jio in a letter to the DoT sought assurance that it won't be held liable for RCom's past dues related to airwaves.
That violates the government's spectrum trading norms which hold the buyer responsible for the dues that have not been recovered from the seller.
Anil Ambani-owned Reliance Communications had signed a pact with Reliance Jio for an estimated Rs 25,000 crore for sale of wireless spectrum, tower, fibre and other assets.
The deal announced in December 2017 and now awaiting Telecom Department's clearance, packed in 122.4 MHz of 4G spectrum in the 800/900/1800/2100 MHz bands, over 43,000 towers, 1,78,000 kilometres of fiber and 248 media convergence nodes.
The pact will allow RCom to partially clear its debt of about Rs 46,000 crore, reportedly owed to 39 lenders.
According to ET, RCom wants to use part of the proceeds to pay a combined Rs 975 crore to Ericsson, an operational creditor, and HSBC Daisy Investments and others, as well as the minority shareholders in Reliance Infratel by December, a deadline mandated by the apex court.
If RCom does not meet the deadline, it might even be dragged to the bankruptcy court.
However, the spectrum sale deal was stuck for clearance from the DoT for want of bank guarantee. RCom in August completed the sale of its fibre assets and related infrastructure assets, worth Rs 3,000 crore, to Reliance Jio.
Meanwhile, the Sensex was trading 107 points higher at 36,460. The Nifty too rose 45 points in early trade to hit 10,951.
Edited by Aseem Thapliyal