RCom firmly in the picture after acquiring Digicable

Reliance Communications rose 1.38% to Rs 194.95 at 9:13 IST after the company approved a proposal to acquire cable television services provider Digicable in an all-stock deal for an undisclosed amount.

The announcement was made after trading hours on Thursday, 1 July 2010. Meanwhile, the BSE Sensex was up 79.97 points, or 0.46%, to 17,589.30.  On BSE, 2.64 lakh shares were traded in the counter as against an average daily volume of 23.29 lakh shares in the past one quarter.

The stock hit a high of Rs 196 and a low of Rs 192.75 so far during the day. The stock had hit a 52-week high of Rs 319.70 on 1 October 2009 and a 52-week low of Rs 131.80 on 21 May 2010.

India’s second largest listed telecom operator by sales has an equity capital of Rs 1032.01 crore. Face value per share is Rs 5.

Reliance Communications (RCom) will merge its direct-to-home services, internet protocol television services and retail broadband services with Digicable. The new entity will be named Reliance DigiCom.

Last month, RCom agreed to merge its telecom towers business with that of GTL Infrastructure. Financial terms of the deal were not disclosed, but the combined operations will have an enterprise value of over $11 billion and will own more than 80,000 towers, with more than 125,000 tenancies from over 10 operators.

RCom said it will retain its optic fibre network and related assets. RCom will receive cash as part of the deal and its shareholders will get shares in GTL Infrastructure. RCom also said that cash infusion will lead to a substantial reduction of its consolidated gross debt and improve leverage ratio, contributing to enhanced financial flexibility.

Details on the cash infusion to RCom, and the share swap ratios will be finalised in due course, the statement said. The deal is expected to close within six months.

On a consolidated basis, Reliance Communications’ net profit declined 19.5% to Rs 1170.11 crore on 14.9% decline in net sales to Rs 4698.24 crore in Q4 March 2010 over Q4 March 2009.

Popularity: 2% [?]

Tags: Anil Ambani, Rcom

Category: Stock-News