Reliance Communications rose 8.13% to Rs 37.90 at 13:16 IST on BSE after the company said it signed binding agreements with Brookfield Infrastructure and its institutional partners for sale of its towers business.
The announcement was made during trading hours today, 21 December 2016.Meanwhile, the BSE Sensex was up 22.96 points, or 0.09%, to 26,330.94.
On the BSE, so far 40.11 lakh shares were traded in the counter, compared with average daily volumes of 16.09 lakh shares in the past one quarter. The stock had hit a high of Rs 38.50 and a low of Rs 35.50 so far during the day.
The stock hit a 52-week high of Rs 91.80 on 1 January 2016. The stock hit a record low of Rs 34.35 on 24 November 2016. The stock had underperformed the market over the past 30 days till 20 December 2016, falling 4.37% compared with the 2.11% rise in the Sensex. The scrip had also underperformed the market in past one quarter, falling 26.67% as against Sensex's 7.72% decline.
The mid-cap company has equity capital of Rs 1,244.49 crore. Face value per share is Rs 5.
Reliance Communications (RCom) announced the signing of binding agreements with Brookfield Infrastructure in relation to the acquisition of RCom's nationwide tower assets by affiliates of Brookfield Infrastructure Partners LP and its institutional partners. RCom will receive an upfront cash payment of Rs 11000 crore on completion of the transaction.
RCom's telecom towers will be demerged into a separate new company that will be 100% owned and independently managed by Brookfield Infrastructure, thereby creating the second largest independent and operator-neutral towers company in India.
RCom said it will receive Class B non-voting shares in the new tower company, providing 49% future economic upside in the towers business, based on certain conditions. RCom expects significant future value creation from the B Class shares, based on growth in tenancies arising from increasing 4G rollout by all telecom operators and fast accelerating data consumption.
RCom will enjoy certain information and other rights, but will not be involved directly or indirectly in the management and operations of the new company. RCom and Reliance Jio will continue as major long term tenants of the new tower company, along with other existing third party telecom operators.
RCom said it will utilise the upfront cash payment of Rs 11000 crore solely to reduce its debt. The already announced combination of RCom's wireless business with Aircel, and the monetization of the tower business, will together reduce RCom's overall debt by Rs 31000 crore, or nearly 70% of existing debt. RCom will continue to hold 50% stake in the wireless business combination with Aircel and the 49% future economic upside in the towers business, and will monetise these valuable assets at an appropriate time in the future to further substantially reduce its overall debt.
The transaction is subject to applicable approvals, including inter alia, shareholder and regulatory approvals, lenders' consents, etc.
Meanwhile, RCom) announced after market hours yesterday, 20 December 2016, that Fitch Ratings (Fitch), International rating agency, has revised the company's long-term foreign, local currency issuer default ratings and senior secured notes (Notes) ratings from 'BB-' to 'B+'. Fitch has also placed on rating watch negative and assigned a recovery rating of 'RR4' to the notes.
On a consolidated basis, net profit of Reliance Communications declined 80% to Rs 39 crore on 3.36% decline in net sales to Rs 5090 crore in Q2 September 2016 over Q2 September 2015.
RCom is an integrated telecommunications service provider.
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