Shares of Anil Ambani-led Reliance Communications (RCom) plunged nearly 13% in the morning trade on Wednesday, after media reports indicated that the Department of Telecommunications (DoT) has rejected the firm’s deal with Mukesh Ambani-led Reliance Jio Infocomm. The telecom department told RCom and Reliance Jio on Tuesday that it can’t approve their deal to trade airwaves as it does not conform to its guidelines, according to a CNBC TV18 report. As per the trading norms, the buyer is liable for dues that are not recovered from the seller, the report added.
On Wednesday, shares of RCom opened at Rs 14.50 a share, down about 9% on BSE from its previous close. The stock was trading at Rs 14.85, down 5.89% at 10:40 AM (IST), after touching an intraday low of Rs 13.77 and an intraday high of Rs 14.95 a share on BSE.
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The development comes after Reliance wrote to DoT on Friday, seeking assurance from the government that it won’t be held liable for Anil Ambani’s Reliance Communications’ past dues pertaining to telecom spectrum. In the letter, Reliance Jio said that RCom has offered a corporate guarantee of Rs 1,400 crore towards settling its dues. However, according to the licence conditions, the Anil Ambani company should also provide a bank guarantee.
On November 30, DoT had reiterated its demand for a bank guarantee of Rs 2,940 crore in lieu of spectrum dues for giving the approval to RCom’s spectrum sale to Reliance Jio. As sought by DoT, RCom’s subsidiary Reliance Realty has furnished worth Rs 1,000 crore of redeemable preferential shares as a corporate guarantee towards outstanding spectrum usage charges of Rs 2,940 crore. It has also given a land parcel as security.
Recently, the Supreme Court of India had asked DoT to grant a no objection certificate (NoC) to RCom to trade its spectrum with RJio Infocomm, on the condition that Reliance Realty does not redeem the preferential shares without DoT’s nod.