Shares of Anil Ambani owned Reliance Communications (Rcom) plunged to an all-time low on Tuesday, after the company called off its plan to merge with Aircel Ltd.
RCom closed at an all-time low of Rs 17.10 on the BSE, down 10.94 per cent from its previous close, while the Sensex closed higher by 213.66 points to 31,497.38.
The company controlled by Anil Ambani called off its merger with Aircel, asserting that “legal uncertainties” and “interventions by vested interests” dealt a severe blow to the hopes of the two debt-ridden telecom companies.
The merger between the two telcos was expected to complete this year and would have created India’s fourth-largest carrier. Also, the merger would have eased the companies to pay down the combined debt that soared to about 600 billion rupees ($9.2 billion) as of the end of last year.
“Unprecedented competitive intensity in the Indian telecom sector together with fresh policy directives, adversely impacting bank financing for this sector, have also seriously affected industry dynamics. As a result of the various factors aforesaid, the merger agreement has lapsed,” said RCom, confirming the termination of merger talks.
On Monday, Anil Ambani-led RCom further expanded its board by adding four new members. The company has also presented an alternative plan for debt reduction by selling company’s real estate, tower and fibre businesses.
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