RCom shares surge after lenders agree to provide 7-month reprieve

Remigio Civitarese
Giugno 5, 2017

"Reliance Communications" (RCOM's) lenders have granted the wireless provider a "standstill" until the end of December 2017, during which it will not have to service debts, and its loans will not accrue interest, the Economic Times reports. "Telecom is one of the most hard businesses in India".

At NSE, shares of the company went up by 4.6 per cent to Rs 21.60. Bonds due 2020 were a quarter point higher at 69/72 cents on the dollar.

The debt-laden company on Friday also said that aggressive tariff war and high taxes may squeeze Indian telecom operators, leaving a gaping Rs 1,20,000 crore deficit between the industry's earnings and its debt/payment commitments this year.

The share recovery comes after RCom slumped 19.8% last week to a series of record lows, registering its worst weekly performance since October 2009 after posting a second consecutive loss and experiencing a slew of credit rating downgrades.

Lenders are already moving to take more stringent action should the carrier fail to deliver. If the company does not resume debt payments in by January, the lenders may exercise their right to convert the debt.

The deals will, needless to say, be closely monitored by business analysts, who, for the moment seem convinced that the incumbent deals are unlikely to turn the company's fortunes around, as the debt will reflect on RCom's balance sheet despite the two deals. RCom faced a tough time previous year, with the launch of his brother Mukesh Ambani's Reliance Jio Infocomm Limited, which took the Indian telecommunication market by the storm, with its competitive prices.

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