Reliance Communications to shift 5-million CDMA users to 4G
Reliance Communications will upgrade its roughly 5 million CDMA customers to a 4G network in phases from May 4, joining bigger rivals Bharti Airtel, Vodafone India and Idea Cellular in rolling out high-speed broadband services.
The plan was revealed on the day ratings company Moody's Investors Service downgraded RCom's outlook to negative from stable, citing delays in the sale of its non-core assets, sending shares of the telco lower.
(The plan was revealed on…)
RCom has been trying to cut about Rs 40,000 crore of debt by selling its tower and optic fibre network and merging its wireless assets with Aircel, both of which have been delayed beyond their initial timelines.
However, Moody's noted that RCom's spectrum sharing and trading pacts with Reliance Jio Infocomm and the imminent completion of a merger with Sistema Shyam Teleservices were positive developments in the past three months.
"We will be upgrading our network from CDMA to LTE (a 4G standard) technology," the Anil Ambani-owned telco said in an April 4 letter to the telecom department. "We would be rolling out LTE services progressively in these service areas from May 4 and necessary intimation will be provided to our existing CDMA subscribers."
RCom will leverage its spectrum sharing pact with Reliance Jio and use its infrastructure to launch 4G services.
People familiar with the plan said RCom will initially roll out the upgrade in Haryana, Punjab, Himachal Pradesh and Odisha, followed by the more lucrative circles of Mumbai and Delhi, and intends to complete the process by August 15.
"RCom has already started intimating subscribers in the four circles that they can upgrade from May 4. It could also offer bundled 4G devices under various instalment schemes to those who don't have 4G handsets," one of the people said.
An industry expert cautioned that moving subscribers from CDMA to 4G may leave them vulnerable to poaching from stronger rivals.
Moody's said that while the benefits of the spectrum agreement will start accruing to RCom with the transition of its CDMA subscribers to LTE, meaningful financial and operational gains will come in only when Jio starts commercial services. Jio is expected to soft launch 4G services this month, with wider commercial operations likely to start around December.
RCom had signed a 17-circle airwave-sharing pact in the 800 MHz band with Jio. It also agreed to sell 800 MHz spectrum to Jio in nine service areas where the Mukesh Ambani company does not have airwaves in this band.
"There is unlikely to be a material improvement in leverage, as well as associated liquidity and refinancing pressures over the next 6-9 months, even if the company (RCom) announces a binding tower sale transaction this quarter," said Nidhi Dhruv, Moody's vice president and senior analyst.
It expects the valuation of RCom's tower assets to be 20-25% lower than its earlier estimate of $3.4 billion.
The ratings company said upon completion of the share-swap transaction with Sistema Shyam Teleservices, RCom will have adequate spectrum and added that if the telco participates in the upcoming spectrum auction, its leverage metrics will be further pressured.
There is also the need to refinance upcoming debt maturities, including $450 million in debt falling due in the quarter ending June 30. "This includes a $350 million ECB facility at Reliance Infratel, which is guaranteed by RCom and has a cross-default with other debt," added Dhruv.
Reliance Infratel operates the towers business. Had the tower transaction closed within the original planned timelines, proceeds from the sale could have been used for debt repayments.
RCom shares fell 1.5% to Rs 50.20 at the close on the BSE, underperforming the broader market.
Source : ET Bureau ; http://articles.economictimes.indiatimes.com
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Reliance Communications gains on FII buying
On May 31, Integrated Core Strategies (Asia) Pte. had purchased 18.48 million shares of RCom at Rs 46.96 per share.
A customer leaves a Reliance communications store in Ahmedabad
Reliance Communications was up 5% at Rs 49.40 on the National Stock Exchange (NSE) in intra-day trade after the foreign institutional investors (FII) bought nearly 1% stake in Anil Ambani Group telecom company for about Rs 87 crore through open market.
On Tuesday, May 31, 2016, Integrated Core Strategies (Asia) Pte. had purchased 18.48 million equity shares representing 0.74% of total equity of Reliance Communications at Rs 46.96 per share via bulk deal, as per NSE data.
The name of the sellers not immediately ascertained.
At 10:49 AM, the stock was up 4.5% at Rs 49.10 on the NSE. A combined 14.45 million shares changed hands on the counter on the NSE and BSE.
On Tuesday, May 31, 2016, Integrated Core Strategies (Asia) Pte. had purchased 18.48 million equity shares representing 0.74% of total equity of Reliance Communications at Rs 46.96 per share via bulk deal, as per NSE data.
The name of the sellers not immediately ascertained.
At 10:49 AM, the stock was up 4.5% at Rs 49.10 on the NSE. A combined 14.45 million shares changed hands on the counter on the NSE and BSE.
Source : SI Reporter ; http://www.business-standard.com
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Reliance Communications looks to cut debt by 75 per cent with Aircel, tower deal
“Integration of MTS business with RCom is on track. We expect to complete the integration in August. We expect to make announcement with respect to Aircel merger anytime in June. Once we complete the Aircel transaction, we will go for the tower deal,” RCom CEO for Consumer Business Gurdeep Singh said today during a conference call.
“With completion of these deals, we expect RCom’s debt to reduce by 75 per cent.”
RCom’s net debt at the end of March 2016 stood at Rs 41,362.1 crore.
RCom and Aircel have extended discussion period for the possible merger of the two till June 22. Singh said discussions are in advanced stages.
RCom and Aircel talks, if successful, would lead to a combined entity holding 19.3 per cent of the total spectrum allocated to the industry — the highest by an entity.
The new entity, which is in the works, would hold spectrum across all allocated bands — 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz — for 2G, 3G and 4G services.
RCom also expects approval from the government for spectrum liberalisation in four circles — Kerala, Karnataka, Tamil Nadu and Rajasthan — by tomorrow. The company has paid over Rs 1,200 crore for liberalising spectrum in these circles.
DoT has already approved liberalisation of RCom’s CDMA spectrum in 17 out of 22 telecom circles. The company is using liberalised CDMA spectrum to offer 4G service to its customers.
RCom is migrating all its CDMA customers to the 4G network in phases and those who want to opt out will be disconnected.
“The current licence requires us to give 30-day notice to customers if we are closing a service. We gave the notice to them in first week of April. Those who do not want to move, they will be switched off today. By June, most of them will be switched off,” RCom President Punit Garg said.
RCom consolidated net profit in the last quarter of ended March 31, 2016 declined by about 22 per cent at Rs 177 crore from Rs 228 crore a year ago.
Source : http://www.financialexpress.com
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