Moneycontrol Bureau
Shares of Reliance Communications (RCom) gained nearly 6 percent intraday Thursday after the company is going to sign binding documentation and announce the proposed Aircel transaction very shortly.
"RCom and Maxis Communications Berhad (MCB) and Sindya Securities and Investments Private Limited, the shareholders of Aircel, expect to sign binding definitive documentation and announce the proposed transaction for the combination of the Indian wireless business of RCOM and Aircel very shortly," the telecom company said in its filing.
Meanwhile, the rating agency has upgraded its outlook to stable from negative on the long term rating BBB+ of Reliance Telecom.
"ICRA has reaffirmed the long term rating at BBB+ (pronounced as ICRA triple B plus) for Rs 812 crore (earlier Rs 867 crore) long term fund based / non fund based bank facilities of Reliance Telecom (RTL). The outlook on the long term rating has been revised to stable from negative," the rating agency says in its report.
It has also reaffirmed short term rating at A2+ for Rs 784 crore (earlier Rs 729 crore) short-term fund-based/non-fund based limits and Rs 500 crore commercial paper programme of RTL.
In arriving at RTL's ratings ICRA has taken a consolidated view of the Reliance Communications (RCom) group including RTL and Reliance Infratel (RITL) and are based on the strong operational and ownership linkages with RCom.
RCom is the fourth largest telecom operator in the country (in terms of subscriber base) and the holding company for all the telecom operations of the group.
ICRA says reaffirmation in ratings and revision in outlook reflects the improving business profile of the group with several initiatives being taken by the group to increase its spectrum holding, provide additional focus on data services including the foray into 4G services. These include the deal to acquire wireless operations of Sistema Shyam Teleservices (SSTL), spectrum sharing and trading deal with Reliance Jio Infocomm (RJIL) and proposed merger of wireless business with Aircel, it adds.
The deal with SSTL will enhance Group's spectrum holding in the 800 MHz spectrum band and will elongate its spectrum validity in eight circles, the rating agency says.
However, the ratings remain constrained on account of its stretched capital structure and the fact that its plans for monetising its assets are yet to be completed, ICRA says.
The Group has been involved with potential investors for sale of its stake in the tower arm RITL, however the discussion period has been extended and there has not been any definitive announcement in this regard. The deal, if concluded, should generate material cash flows for the Group, which is expected to be used for debt repayment.
The debt of the Group stood elevated at Rs 43,596 crore as on March 31, 2016.
At 11:52 hours IST, the scrip of Reliance Communications was quoting at Rs 48.65, up Rs 0.95, or 1.99 percent on Bombay Stock Exchange.Posted by Sunil Shankar MatkarDisclaimer: Reliance Jio is a part of Reliance Industries that owns Network 18 and moneycontrol.com.
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