Reliance Communication Ltd’s shares tumbled 2.6 per cent in an early trade on Thursday, a day after Ericsson India filed insolvency petitions against the debt-laden telecom company and its subsidiaries. Reliance Communication Ltd’s shares were trading at Rs 21.35 down by 2.6 per cent.
The Swedish telecoms equipment maker, which signed a seven-year deal in 2014 to operate and manage Reliance Communications’ nationwide network, is seeking a total of Rs 1,156 crores from the company and two of its subsidiaries, Reuters reported. Reliance Communications reported its third quarterly loss in a row last month. It is trying to find ways to cut debt after lenders gave it a reprieve on loan repayments until the end of 2017.
The Anil Ambani-controlled company had earlier delayed repayment of loans to more than 10 banks. The company also had plans to repay Rs 25,000 crore worth of loans to its lenders with proceeds from its deals with Aircel and Canada’s Brookfield Infrastructure.
However, if the National Company Law Tribunal (NCLT) admits the insolvency petitions, it could block the way of RCom’s proposed merger with Aircel. Ericsson India had earlier objected to the merger, seeking a creditors’ meeting. Besides Ericsson India, Chennai Network Infrastructure — a GTL subsidiary — and Bharti Infratel had also objected to the possible merger.
Earlier this year, rating agencies Fitch and Moody’s downgraded Reliance Communications’ debt rating deeper into junk grade. Moody’s cut it to Caa1 from B2, while Fitch lowered its rating on the company to CCC, implying that some kind of default on the company’s debt is a “real possibility”.