Thursday, April 07, 2016

DO YOU KNOW?
Reliance Communications Ltd (RCOM) has entered into active infra sharing with 4G entrant Jio, which allows RCOM to offer 4G services without investing much capex. RCOM's active sharing limits its (RCOM, the anchor tenant) demand for additional towers in the near to medium term.

This will save infra - cost of Reliance Communications Ltd (Rs.50.95) and will be EBIDTA positive.  

Also, the RCOM has chosen to offer 4G services, by leveraging (Mukesh Ambani's) Reliance Jio’s 4G network. This is the key point which will give RCOM the much needed ammunition, to rationalize its price (call tariff and data) against the price offered by Reliance Jio and other players; giving it some advantage.

Moreover, if RCOM asks for a premium from Jio for trading in 800 spectrum-band, then it can help it ward off some of the debts.

Besides, the Union Cabinet has cleared liberalisation of spectrum - allocated without auction to telecom companies - at Trai recommended price with the balance being collected after deriving market rate through bidding.

A liberalised spectrum allows telecom operators to use any technology to deliver mobile services like 3G and 4G. Besides, they will be able to introduce new technologies and share and trade it with other operators for its efficient use.

The Cabinet decision taken, will enable Reliance Communications   (RCom) to liberalise its spectrum in four telecom circles, where auction determined price is not available, for Rs.1,300 crore. A liberalised spectrum allows telecom operators to use any technology to deliver mobile services like 3G and 4G. Besides, they will be able to introduce new technologies and share and trade it with other operators for its efficient use.


Therefore, in any case the target for Reliance Communications Ltd (Book Value: Rs.144.13; Market Cap of Rs.12681.25 Cr), stays at Rs.71, in the short term.
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