Reliance Communications share price fell 1.6 percent intraday Friday on a media report that the Anil Dhirubhai Ambani Group company may surrender its some spectrum to government.
"The loss-making company, which had earlier sought deferment in debt servicing obligations from banks, has approached the telecom ministry to surrender a part of its spectrum holdings in the 1,800-MHz frequency, the Times of India said quoting sources.
The company has also sought a refund of some of the payments, which have been made, the report added.
The move, if allowed by the government, will also enable the debt-laden company to escape paying the instalments towards the purchase of spectrum that it now wants to surrender.
The company has huge debt on its books and insufficient cash to pay that debt. Hence, the rating agencies recently downgraded the company and its bonds due to poor liquidity positions.
"Reliance Communications had poor liquidity at end-March 2017, with cash and equivalents of Rs 1,400 crore - insufficient to pay short-term debt of Rs 10,900 crore," Fitch Ratings said in its report dated June 6, 2017.
Its EBITDA (earnings before interest, tax, depreciation and amortisation) declined by 30 percent to Rs 4,900 crore in the financial year to end-March 2017 (FY17), from Rs 7,100 crore in FY16, and is likely to be insufficient in FY18 to meet annual interest costs of Rs 3,500 crore and maintenance capex of Rs 1,500 crore, it feels.
At 12:03 hours IST, the stock price was quoting at Rs 21.75, down Rs 0.20, or 0.91 percent on the BSE.
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