Reliance Communications slumped 6.25% to Rs 18 at 10:35 IST on BSE after the company's board of directors have called off merger of RCom's mobile businesses with Aircel.
The announcement was made on Sunday, 1 October 2017. The market remained closed on Monday, 2 October 2017, on account of holiday.Meanwhile, the S&P BSE Sensex was up 233.12 points, or 0.75% to 31,516.84. The S&P BSE Mid-Cap index was up 163.92 points, or 1.06% to 15,599.93.
On the BSE, 24.71 lakh shares were traded in the counter so far, compared with average daily volumes of 30.62 lakh shares in the past one quarter. The stock had hit a high of Rs 18.85 in intraday trade. The stock had hit a low of Rs 17.45 so far during the day, which is also a record low for the stock. The stock had hit a 52-week high of Rs 48.45 on 10 October 2016.
The board of directors of Reliance Communications (RCom) at a meeting held on Sunday, 1 October 2017, reviewed the ongoing strategic transformation programme, and considered alternate plans for debt reduction.
RCom and Aircel had signed binding agreements in September 2016 for the merger of RCom's mobile businesses with Aircel. Legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction.
Unprecedented competitive intensity in the Indian telecom sector, together with fresh policy directives adversely impacting bank financing for this sector, have also seriously affected industry dynamics. As a result of the various factors aforesaid, the merger agreement has lapsed and the board approved the same.
Separately, the board decided that RCom will evaluate an alternate plan for its mobile business, through optimization of its spectrum portfolio and adoption of a 4G focused mobile strategy.
RCom already has the unique advantage of capital light access to India's most extensive world class nationwide 4G mobile network through spectrum sharing and ICR (intra circle roaming) agreements with Reliance Jio.
The combination of the mobile business of Sistema Shyam Teleservices (SSTL) into RCom is also expected to be completed this month. The addition of SSTL's valuable spectrum holdings in the 800-850 MHz band will strengthen RCom's spectrum portfolio by 30 Mhz, and extend the company's spectrum validity period in 8 important circles in the country till the year 2033 i.e. for another 16 years.
The company has valuable spectrum across 800/900/1800/2100 Mhz spectrum bands aggregating 200 Mhz, valued at over Rs 19000 crore for the balance of validity period, based on last auction pricing. The company will evaluate opportunities for monetization of the same through trading and sharing arrangements.
The company has made good progress in its monetization plans for prime real estate assets, including at Dhirubhai Ambani Knowledge City, Navi Mumbai admeasuring nearly 125 acres, with development rights of potentially over 17 million square feet and prime property near Connaught Place, New Delhi admeasuring nearly 4 acres.
Indications of interest from leading developers, and independent third party valuations, have established significantly higher present value monetization potential of Rs 10000 crore for the DAKC Complex alone. The company is engaged with leading global and domestic players, and expects to finalize developments agreements through an open and transparent process over the next few months.
The company will continue to implement its plans for monetization of its tower and fiber assets, as already announced.
The company continues to be under a standstill period till December 2018 and expects to complete the strategic debt restructuring (SDR) process as per applicable guidelines. Shareholders of the company at the Annual General Meeting held on 26 September 2017 have already approved issuance of equity shares to lenders by conversion of loans.
The company will also focus on domestic and overseas stable, capital light B2B businesses which have sustained and predictable revenues and profits, with immense growth potential.
Separately, company said on Monday, 2 October 2017 that at a meeting held on that day, it expanded its board by inducting its senior executives as additional directors of the company. Punit Garg, President, Telecom Business has been elevated to the board as Executive Director. Manikantan V., the Chief Financial Officer (CFO) of the company has also been elevated to the board as director and CFO.
On consolidated basis, RCom reported net loss of Rs 1221 crore in Q1 June 2017 compared with net profit of Rs 54 crore in Q1 June 2016. Net sales fell 33.6% to Rs 3494 crore in Q1 June 2017 over Q1 June 2016.
RCom is an integrated telecommunications service provider.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content
