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RCom stock on a roller coaster ride on deal with Jio, debt cut plan; have you cashed in on the rally?

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The Reliance Communications (RCom) stock surged in Friday’s trade after Reliance Jio announced it would buy wireless infrastructure assets of Anil Ambani’s Reliance Communications. The deal is likely to help the Mukesh Ambani-led Jio intensify its fight with rival Bharti Airtel not only in the mobile telephony business but in the fibre to home space too. Reliance Jio has become the fourth-largest telco by subscriber base since it was launched on September 5, 2016. The Reliance Communications stock rose up to 35% or 41.77 level a day after Reliance Industries announced signing of ‘definitive agreement’ for the acquisition of specified assets of Reliance Communications and its affiliates.Also read:Mukesh Ambani’s Reliance Jio to acquire wireless assets of brother Anil’s RComAt 12:05 pm, the stock was trading 16.47% or 5 points higher at 36.06 on the BSE.  A flow of positive news has sent the stock on a roller coaster ride in the last three trading sessions. On December 26, Reliance Communications chairman Anil Ambani announced a new asset monetisation plan and its exit from the strategic debt restructuring (SDR) framework. Anil Ambani-led RCom will reduce debt by about Rs 25,000 crore through the sale of some of its spectrum, tower and real estate assets. Debt resolution involves RCom exiting SDR framework with no conversion of debt into equity and zero write-off by lenders and bond holders, Ambani had said, adding he expects full closure by March 2018. Under the new debt revival plan, upon completion of all transactions, the balance debt in RCom is expected to be Rs 6,000 crore, a reduction of over 85 per cent of total debt, RCom said in a release.Reacting to the positive news, the Reliance Communications stock closed 30.78 percent or 5 points higher at 21.33 level on December 26 after Ambani’s announcement.Bouyed by the positive sentiments arising out of the debt cut announcement, the stock closed 34.74% higher on December 27 on the BSE. Since December 26, the stock has gained 156% on positive news. On an year-to-date basis, the stock is up 6.73% and has gained 8% during the last one year period. Yesterday, announcement by Reliance Industries that Reliance Jio would buy acquire wireless infrastructure assets of Anil Ambani’s Reliance Communications proved to be an icing on the cake for the beaten down stock. During the last five yearsa, the stock is down more than 50% on BSE. According to the deal, Reliance Jio will acquire towers, optic fiber cable network or OFC, 4G Spectrum from RCom. Reliance Jio emerged as the successful bidder in the two-stage bidding process.The deal is slated to bring relief to RCom which is reeling under debt of around Rs 45,000 crore. Reliance Jio or its nominees will acquire assets under four categories – Towers, Optic Fiber Cable Network (“OFC”), Spectrum and Media Convergence Nodes (“MCN”) from RCOM and its affiliates. “These assets are strategic in nature and are expected to contribute significantly to the large scale roll-out of wireless and Fiber-to-Home and Enterprise services by RJIL,” the statement said.

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