1. Brookfield deal lifts RCom stocks up 9% intraday

Brookfield deal lifts RCom stocks up 9% intraday

The stock of Reliance Communications (RCom) on Wednesday surged over 9% on the bourses after the company signed agreements with Canada-based Brookfield Infrastructure and institutional partners to sell its tower business for R11,000 crore.

By: | Mumbai | Published: December 22, 2016 6:06 AM

The stock of Reliance Communications (RCom) on Wednesday surged over 9% on the bourses after the company signed agreements with Canada-based Brookfield Infrastructure and institutional partners to sell its tower business for R11,000 crore.

Soon after the agreement was signed, the RCom stock rose more than 9% to touch a one-month high of R38.30.

It finally closed at R37.45, up 6.8%, on BSE. The number of shares traded on Wednesday rose to 48.55 lakh against the two weeks average of 7.62 lakh.

RCom, in an exchange filing, said, on completion of the transaction the company will receive an upfront cash payment of R11,000 crore from Brookfield Infrastructure. The company will also receive Class B non-voting shares in the new tower company, providing 49% future economic upside in the towers business.

RCom in the statement stated that they will utilise the cash of R11,000 crore solely to reduce company debt. This year in September, RCom merged with non-listed Aircel in an attempt to reduce their debt burden.

“The already announced combination of RCom’s wireless business with Aircel, and the monetisation of the tower business will together reduce RCom’s overall debt by R31,000 crore ($4.6 billion), or nearly 70% of existing debt,” the Indian telecom company said.

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At the end of the first quarter of the current financial year, RCom incurred a net loss of R864 crore and the company’s net debt stood at R41,802 crore as of March 31, 2016.

An HSBC report published in June said, “Historically, RCom has been losing revenue market share, and execution has been a challenge. Key upside risk is the company’s ability to monetise tower assets in the near term.”

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