RCom falls 11% as Aircel merger called off
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Shares of Reliance Communications (RCom) on Tuesday ended nearly 11% down on the bourses, eroding as much as Rs 523 crore in market capitalisation. The RCom stock opened on at Rs 18.70 on the BSE, then lost further ground and fell to an intra-day low of Rs 16.75.
At the end of Tuesday’s trading session, the stock settled at Rs 17.10, down 10.94% over its previous close on BSE.
On the NSE, similar trend was seen where the stock opened at Rs 18.65, and then slumped to an intra-day low of Rs 16.75 and finally settled at Rs 17.15, down 10.68%.
The stock of RCom has slumped ever since the entry of Reliance Jio, a subsidiary of Reliance Industries, on September 1, 2016. RCom shares fell by 68% since September 2016 and have lost Rs 9,159 crore in market value. The company posted its first annual loss of Rs 1,403 crore in FY17.
As of March 2017, the consolidated total debt of the company stood at Rs 45,733 crore. In June, lenders had given the company seven months time to pare its debt and service loans regularly.
RCom in an exchange filing said that the merger agreement with Aircel was allowed to “lapse by mutual consent”, due to regulatory delays and changed industry dynamics.
The company said it is looking at alternatives to reduce debt, including the sale of real estate assets and “optimization of spectrum”.
The entry of Reliance Jio had necessitated consolidation in the telecom sector. In February 2017, Bharti Airtel announced its decision to acquire the Indian business of Telenor. In March, Idea Cellular announced its plans to merge with Vodafone India.
Of the 12 brokerages who track RCom’s stock, one has given it a ‘Buy’ rating, eight have given it a ‘Sell’ rating while the remaining three have given it a ‘Hold’.
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