Rcom hits a new 52-week high

Reliance Communication (RCom) hit a new 52-week high today also at Rs.87.70. Yesterday’s new high was on account of the news that the company had begun monetization of surplus real estate. It said that it had completed sale of nearly 150 residential flats situated at Sea Woods complex in Navi Mumbai for Rs.330 crore. It has received 50% of the money and the balance will come in within the next 2-3 months.

Today’s news is that the company is holding discussions with Aircel to merge its wireless business. If this does happen, the combined entity of Rcom, Sistema and Aircel will have a huge subscriber base of 200 million subscribers.

The best news is that if this goes through, the beleaguered Rcom will finally become debt-free with over Rs 10,000 crore transferred to the separately-listed combined entity.

But our Editor, Mr.SP Tulsian disagrees with this debt-free tag. Explaining this, he said, “Aircel has Rs.20,000 crore of debt and RCom will be transferring Rs 10,000 crore of debt to the merged entity. So, the merged entity will have Rs 30,000 crore of debt from day one. Because RCom owns half the company, it will continue to own a significant chunk of the Rs 30,000 crore at the consolidated level. So, it’s wrong to say that RCom will be debt-free.”

The next trigger for the stock could be the announcement of sale of its 4 acre property in prime place in New Delhi.