The Hindu Business Line : Tata Comm drops 11.4% as it loses case against FLAG

Mumbai, April 8 The shares of Tata Communications (earlier VSNL) dropped 11.43 per cent on Tuesday on the Bombay Stock Exchange (BSE), on news that the company had lost its appeal against FLAG at the District Court of Hague, over allowing the latter access to the FLAG Europe Asia Cable landing station in Mumbai.

The amount that VSNL stands to pay FLAG is yet to be determined. FLAG is a subsidiary of Reliance Globalcom, itself a unit of Reliance Communications, a Anil Dhirubhai Ambani Group company.

Tata Communications closed at Rs 479.45, down Rs 61.90 or 11.43 per cent on the BSE, brought down by news of the Court order that came late in the evening on Monday. Tata Communications has been asked to pay the cost of the proceedings by the Court.

Landing station

The company had appealed to the Court seeking to set aside a ruling by the International Tribunal of the ICC (International Chamber of Commerce) in 2006, which had gone in favour of FLAG. FLAG had referred the matter to the Tribunal, after it was denied access to the VSNL landing station.

The financial implications of this ruling have not been spelled out by the ICC yet. The Tata Communications scrip touched an intra-day low of Rs 475. Prior to this ruling, the stock has been putting up a good show on the bourses; it had gained over 4.83 per cent in the last one month. “The sharp fall in the share price was due to the sentimental impact of the Court order,” said Mr Harit Shah, an analyst with Angel Broking.

Sluggish Movement

It is difficult to say whether the impact is temporary, said another analyst. Telecom counters have been witnessing sluggish movement in the recent past, inline with the general market. Tata Communications’ 52-week high and low are Rs 783 and Rs 360.5 respectively.

Meanwhile, the other telecom stocks that also saw a drop in their prices included Reliance Communications itself (1.08 per cent); Idea Cellular (1.45 per cent) and Tata Teleservices (Maharashtra), which was marginally down by 0.36 per cent.

The gainers were Bharti Airtel (1.25 per cent) and Shyam Telecom (1.87 per cent).

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