Department of Telecommunications Invokes Bank Guarantees over Deferred Spectrum Payments by Reliance Communications Limited
The Department of Telecommunications (DoT), Ministry of Communications, Government of India, has invoked or encashed several Financial Bank Guarantees (FBGs) furnished by various banks on behalf of Reliance Communications Limited (RCOM). These actions relate to the nonpayment and alleged default in deferred annual spectrum installments owed to DoT following various spectrum auctions.The FBGs were issued by various financial institutions supporting RCOM, covering spectrum acquired during multiple auction periods. DoT communicated that the invoked guarantees correspond to unpaid deferred annual spectrum instalments, as per the terms and conditions of the respective spectrum auctions and the associated FBG arrangements.
Details of Bank Guarantee Invocation
The invocation pertains to several specific spectrum auctions and corresponding banking partners. The aggregated amount across all listed transactions amounts to approximately ₹801.91 crore.A summary of the bank guarantees invoked by DoT is detailed below:
| Spectrum Auction Period | Issuing Bank | Aggregated Amount |
|---|---|---|
| 2013 Spectrum Auction | Yes Bank Limited | ₹281,44,90,001 |
| 2015 and 2016 Spectrum Auctions | Punjab National Bank | ₹114,09,30,516 |
| 2015 Spectrum Auction | Canara Bank | ₹157,07,55,606 |
| 2014 and 2015 Spectrum Auctions | State Bank of India | ₹249,29,21,711 |
Financial Implications and Status
The invocation or encashment of the FBGs has financial implications for RCOM corresponding to the amounts invoked by DoT. The company is currently examining the detailed financial and legal ramifications arising from this invocation and encashment. This examination includes assessing the consequential impact on the Company's liabilities and claims regarding the underlying spectrum payment obligations.Reliance Communications Limited has taken note of the communications issued by DoT concerning these matters, including the basis and manner of the FBG invocations and their consequences. The company is actively examining all aspects of this development.
RCOM Stock Price Movement
On Friday, shares of Reliance Communications Limited gained significantly to settle at ₹0.82, after edging up 2.5%. The equity saw 3.01 million shares change hands during the session, driven by the overall market movement.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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