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Jio Deal In Danger If Land Parcel Denied As Security By DoT: RCom To SC

Reliance Communications told the SC that its spectrum trading deal with Reliance Jio Infocomm will be in dire straits if the Department of Telecommunications does not accept a land parcel instead of bank guarantees as security for repayment of earlier dues and clear the spectrum trading deal.

Reliance Communications has told the Supreme Court that its spectrum trading deal with Reliance Jio Infocomm will be in danger if the Department of Telecommunications (DoT) does not accept a land parcel instead of bank guarantees as security for repayment of earlier dues and clear the spectrum trading deal.

RCom told the apex court that if DoT does not give an NoC (no-objection certificate) to the spectrum trading deal with Jio, then the deal will fail.

For RCom, the spectrum deal is an important part of its overall asset sale to Mukesh Ambani-owned Jio, which will help the company reduce its debt of Rs46,000cr. If the deal fails, then the company will not be able to pay its dues to companies such as Ericsson within the stipulated time and could head into insolvency.

However, the DoT has said it will only accept bank guarantees for the ~Rs3,000cr-dues and has also suggested that Jio could also make the payment on RCom’s behalf.

Reliance Communications Ltd share price is currently at Rs13.21, down Rs0.11, or 0.83%, from its previous close of Rs13.32 on the BSE. The scrip opened at Rs13.32 and has touched a high and low of Rs13.58 and Rs13.06, respectively. The stock is currently trading above its 200-DMA. – IIFL
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