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Reliance Communication - High Risk Bet

Reliance communications after months of negation with Aircel,announced their merger . The expected merger will be completed by 2017 depending upon the regulatory and competition commission approval. 

All around news articles are there that Reliance communications debt of 20k Cr will be transferred to new entity but that is not the fact. On a consolidated basis there will not be any change.  On top of that they are looking for $1 investment so that they should have enough cash to sustain the tariff onslaught initiated by Reliance Jio. The wireless business of Reliance communications will be demerged and will come in new entity. 

Reliance communications wireless business is showing dismal result both on revenue and profitability front.

The remaining business is generating close to 1150 Cr per quarter but at the same time will have to service 217 Cr plus debt. For that growth is important. 

Reliance communications is trying to sell their Tower and optical business for the last 3 years.
It is also not clear how existing shareholder will be taken care off by the company.  Moody, the rating company also put Rcom under rating re-creating category post merger and poor performance. 

It is recommended that investor should stay away from RCOM as it's very risky bet. Lease stay away from F&O market.

Please consult your financial advisor before investing
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About Devendra Prasad

20 years plus industry veteran of domestic and international ICT domain with the expertise in Business, Technology, Strategy and Analysis. Specializes in forecasting impact analysis, trends and recommendations for Investments, Technology and Regulations.
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