Shares of Anil Ambani’s telecom company RCom have more than tripled in the last 8 trading days as elder brother Mukesh Ambani’s Reliance Jio had finalised to acquire the wireless assets from Reliance Communications. The buzz of Reliance Jio buying the assets of troubled RCom came around 18 December 2017, since then the share price of Reliance Communications has been on a rising streak. With a massive upsurge achieved in 8 trading days, shares of Reliance Communications have advanced about 253% to a 52-week high of Rs 41.77 on BSE. Today only, shares of RCom surged as much as 34.91% to hit a 52-week high of Rs 41.77 while the stock rose 29.68% to the day’s high of Rs 40.15 on NSE. Since 19 December 2017, huge trading volumes have been observed in the shares of Reliance Communications. About 36 crore shares exchanged hands on both BSE and NSE with over 342 crore shares on NSE alone.
Following a huge 8-day spurt in the share price of Reliance Communications, the market capitalisation of the company have moved from Rs 3,534.33 crore to Rs 11,539.18 crore (at a 52-week high price of Rs 41.77 per equity share on BSE). Earlier this week on Tuesday, RCom shares zoomed as high as 41% in the intraday trades after Anil Ambani said the total debt of the company would be reduced by Rs 39,000 crore and the company will close all the transactions by January-March 2018.
In a major development on Thursday, RCom said that it has signed a definitive agreement with Reliance Jio for sale of towers, MCNs and fibre. The company will sell 4G services and 43,000 towers to Jio. On the 85th birth anniversary of father Dhirubhai Ambani, Mukesh Ambani, India’s richest businessman today stepped in to bail out younger brother Anil Ambani’s debt-ridden Reliance Communications by acquiring spectrum, tower, optical fiber network and other wireless assets in a deal. The announcement comes just two days after Reliance Communications disclosed a new deal with the lenders under which nearly Rs 40,000 crore will be raised through the sale of assets, averting an imminent takeover by the 35 local and foreign banks.
In the Reliance Communications presser held on Tuesday, Anil Ambani said the company will exit the strategic debt restructuring plan with a zero write-off to lenders and bankers. Reliance Communications will be reducing its debt by monetising the assets of its wireless business and no part of the debt will be converted into equity under the new plan. Anil Ambani massive debt recast plan to revive Reliance Communications comes as a rescue to the company which was facing the threat of insolvency as it has defaulted to on US dollar bonds and has failed to clear dues to its domestic and foreign lenders.
RCom expects to receive about Rs 25,000 crore from the sale of these assets, while it sees a reduction in debt of another Rs 10,000 crore from the commercial development of the Dhirubhai Ambani Knowledge City campus in Navi Mumbai. The major part of the debt would be reduced via prepayments and post the debt reduction exercise, Reliance Communications debt will substantially reduce to Rs 6,000 crore from Rs 45,000 crore. The huge reduction of Rs 39,000 crore from the debt is the largest debt reduction in the history of corporate India, Anil Ambani said in the presser.
At the end of the process, the ‘new RCom’ will have a debt of just Rs 6,000 crore down from Rs 45,000 crore in October, Anil Ambani claimed, adding RCom will serve only the low-capex and high-margin enterprise space hereon. “I hope as a group and RCom, we never ever have to understand, appreciate, analyse or face an IBC, an NCLT or an SDR or any such process ever,” Anil Ambani said.
On 15 November 2017, most shares of the Reliance ADAG tumbled sharply amid heavy trading volumes in the late afternoon trade, with the Anil Ambani group’s Reliance Communications shares falling to single digits for the first time ever. Shares of Reliance Communications fell 17% to hit an all-new record low of Rs 9.6.