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RCom recovers from steep intraday fall after clarification

Capital Market / 12:32 , Feb 02, 2012

Reliance Communications declined 4.03% at Rs 96.35 at 12:12 IST on BSE, recovering sharply from day's low, after the company in clarification to the today's Supreme Court ruling said it was issued licences in 2001 and prior.

The announcement was made during trading hours today, 2 February 2012.

Meanwhile, the BSE Sensex was up 120.47 points, or 0.70%, to 17,421.05

On BSE, 66.37 lakh shares were traded in the counter as against an average daily volume of 22.36 lakh shares in the past one quarter.

At the day's low of Rs 91.05, the Reliance Communications (RCom) stock had lost as much as 9.31%. The stock hit a high of Rs 102 so far during the day. The stock had hit a 52-week low of Rs 61 on 20 December 2011. The stock had hit a 52-week high of Rs 125.20 on 1 February 2011.

The stock had outperformed the market over the past one month till 1 February 2012, surging 43.74% compared with the Sensex's return of 11.94%. The stock also outperformed the market in past one quarter, rising 29.72% as against Sensex's decline of 1.03%.

India's second largest listed mobile operator by sales has an equity capital of Rs 1032.01 crore. Face value per share is Rs 5.

In an announcement made during market hours today, RCom said it was issued licences in 2001 and prior and stated that its licences are not affected by the Supreme Court ruling pronounced today, 2 February 2012.

RCom's clarification came after the Supreme Court today, 2 February 2012 ordered the Department of Telecommunications to cancel all the 122 mobile telecom services licences it allotted after January 2008.

Today's crucial judgment was following allegations of irregularities during the 2008 allotment of the licenses and bandwidth which led to the arrest of politicians, former government officials and several industry executives.

A government auditor in late 2010 pulled up the department for giving 85 licenses bundled with bandwidth to offer mobile services to companies which didn't have the required capital. Some other license holders have also been issued notices for not meeting service launch rules.

Meanwhile, within two months the Telecom Regulatory Authority of India (Trai) will recommend fresh guidelines on the grant of new licences. The government will make its decision after one month after submission of the recommendations.

Reliance Communications' consolidated net profit declined 43.5% to Rs 252 crore on 5.7% fall in net sales to Rs 4689 crore in Q2 September 2011 over Q2 September 2010.

Reliance Communications is an integrated telecommunication company with over 156 million customers. Its business encompasses a complete range of telecom services covering mobile and fixed line telephony. It includes broadband, national and international long distance services and data services along with an exhaustive range of value-added services and applications.

 



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