|Photo: The Telegraph|
RCom has made a public commitment to use the entire proceeds from the sale for DEBT REDUCTION.
This means that, if the dates are to be taken as sacroscanct, then within two months we can expect, a substantial reduction of Reliance Communication Ltd's debts.
Meanwhile, Mr.Gurdeep Singh, CEO for Consumer Business said during a conference call: “Integration of MTS business with RCom is on track. We expect to complete the integration in August. We expect to make announcement with respect to Aircel merger anytime in June. Once we complete the Aircel transaction, we will go for the tower deal. With completion of these deals, we expect RCom’s debt to reduce by 75 per cen".
RCom and Aircel talks, if successful, would lead to a combined entity holding 19.3 per cent of the total spectrum allocated to the industry — the highest by an entity.
The new entity, which is in the works, would hold spectrum across all allocated bands — 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz — for 2G, 3G and 4G services.
RCom also expects approval from the government for spectrum liberalisation in four circles — Kerala, Karnataka, Tamil Nadu and Rajasthan — by tomorrow. The company has paid over Rs 1,200 crore for liberalising spectrum in these circles.
DoT has already approved liberalisation of RCom’s CDMA spectrum in 17 out of 22 telecom circles. The company is using liberalised CDMA spectrum to offer 4G service to its customers.
Earlier, Mukesh Ambani’s Reliance Jio Infocomm Ltd and Anil Ambani’s Reliance Communications Ltd signed a Rs.12,000-crore deal that lets Reliance Jio use the telecom towers of RCom to launch its fourth-generation (4G) services — a pointer to the growing camaraderie between the brothers.
Reliance Jio — the telecom arm of Reliance Industries — will use up to 45,000 ground and rooftop-based towers of R-Com’s nationwide network for the rollout of its 4G services.
Reliance Jio will pay Rs 12,000 crore over the entire period of the contract.
Though both the companies were tightlipped about the time frame of the contract, sources put it at 15 years, in which case R-Com will get around Rs 800 crore annually.
A press statement issued by both the groups said they would explore the possibility of building new towers as well.
RCom's consolidated net profit in the last quarter of ended March 31, 2016 declined by about 22% at Rs.177 crore from Rs.228 crore a year ago.
However, coming out with profits, even though it is having huge debts (or in tight liquidity conditions), speaks volumes about the resilience of the company.
The promoters holding in the company stood at 58.85% while Institutions and Non-Institutions held 28.77% and 11.94% respectively.
A Foreign Institutional Investors (FII) have recently bought nearly 1% stake in this ADA Group telecom company, for about Rs.87 crore through open market.
In such a positive environment, I would suggest you to BUY in BULK, the stock of Reliance Communications Ltd (Rs.48.95), like you are doing in case of Unitech Ltd (Rs.3.89) and keep holding for 4-6 months to MORE than DOUBLE your INVESTMENT CAPITAL.