Rcom: Solid Value Emerging @ Rs93 Assets Remain

Reliance Communications: If Rcom is Finished Anil Ambani is as good as Gone. Out and Over....


Caution is Advised : If you feel Anil Ambani is Over No Point Reading. I believe the financial numbers he reports on the stock exchanges.

Not a time to panic atleast..
Market Cap :19,200 Crs
Net Debt :32,000 Crs
Enterprise Value :51,000 Crs

Its His Flagship Company. Flagship Company of the Anil Dhirubhai Ambani Group. No Doubt Higly Leveraged Company but Recent Drop a Excess.

@ Current Price of 93
Anil Ambani's Stake in Company:::::: Rs 13,000 Crs
Mutual Funds @:::::::::::::::::::::::::::::Rs186 Crs
Financial Institutions:::::::::::::::::::::::Rs 50 Crs
Insurance Companies:::::::::::::::::::::::Rs 1529 Crs
Foriengn Investors:::::::::::::::::::::::::: Rs1616 Crs
Bodies Corporate::::::::::::::::::::::::::::::Rs428 Crs

Individual Investors:::::Rs1971 Crs(Highest after ADA) 20.6 lac investors
HNI's:::::::::::::::::::::::::::::::::::::::::::::::Rs161 Crs

U think Anil Ambani does not Have Rs 6000 Crs to buy out the remaining investors.
Just Google his $825 Million Investments with Steven Spielberg.
None of his shares are pledged. He can very well pledge it..
Its not so easy to Buy it out. More frenzy Bad news. He will Continue to buy.. He added 70+lac shares over the last week but that just Rs 70 crs odd. He will buy that what i would have done.

Lets Discuss His Overleveraged Debt For Once...
Net Debt for last 4 quarters.
Q3 2011:::::::Rs 32,447 Crs Adjusted for that : 30,685 Crs
Q2 2011:::::::Rs 29,190 Crs (Payment of Rs 1750 Crs was made for Liabilities in Q2)
Q1 2011 ::;::: Rs 28,481 Crs (Increase due to 3G Liscense fee)
Q4 2010::::::::Rs 19,983 Crs

All people going gung ho Debt and reducing target. Reduce it before Price Action . Cant Justify it post results..Even though many have kept EBIDTA projections the blame the Debt for steep cut in estimates. Utter sorrow for those.

OK Operationally was not a good quarter atall.Minutes of usage fell on a strong quarter. On first glance i got scared seeing the results itself..

On the conferance call heard him talk bout reduction in PCO Minutes to free up spectrum????? They already have so much excess unutilized network.. Tough to digest this fact.Lets see but feel it will be stable around these levels

I have a very good suggestion for Mr Ambani Launch BIG Telecom for GSM (NO HIGH END SUBSRIBERS CHOOSING RCOM).



If Rcom had not bid for 3G Debt would have been lower by 8,500 Crs Minimum)
Was It a Wrong Desicion No
It could not let another competitor Jump Fray and it needed spectrum atleast fors Delhi.

I would love to go on a Debate on this that 2g caused losses on 3G PRICES basis.
1st it was awarded in a wrong way but wake up People

Who was Going to Bid at 3G PRICES. GIVE THE REAL REASON THAT IT WAS A HOGWASH TO BUY AND SELL spectrum TO FORIGN TELCOS WITHOUT EVEN ROLLING SERVICES;for some favoured people which was very well know by each and every person.Please read news papers archives to understand



The stock has fallen to such levels that even if all the following conditions below have been factored in.
1)Anil Ambani Going Down Under.
I keep asking myself what is wrong with the country.
Each and everyone in the Know how of Spectrum knew about the misdoings of former telecom minister A Raja. How the liscenses got awarded. To top it up everyone knew about Reliance's investments in Swan. AND WIPING OF BILLIONS OF DOLLARS OF A COMPANY ON NEWS of BRIBES OF rs 200 crs were paid.. hahahahahahaha LOOK AT THE RATIO..

if real figures come out.each and every stock listed on the stock exchange can be bought with that amount.

One thing i cant understand when the liscenses were awarded BJP did not demand a standstill???????????????????????????????????Atleast when they were being sold? I atleast cant believe PM Dint have a clue. When you have deals worth billions of dollars taking place. We are not United States of America that we dont care for deal values which took place post allotment. It figured as a % of our forex reserves.


Anil Ambani is not the same he Used to be(in terms of power and control)..

However his companies have taken a further beating
On a consesus estimate Rcom is going to earn between 7000-7500 Crs EBIDTA for fy12& FY13..

Take the figure @ 7000 Crs ebita take 3000 crs interest rough estimate(yet to refinance 1.3 billion$) from China awaiting that.
Not taking any taxation figure and limited Capex @ 1000 crs
He will be able to pay close to 5,000 Crs of Debt over 2 years which would bring the net devt to around 26000 cRs It is not easy to understand the exact cost of capital(big -ve) Going to be long but think once from the promoter angle aswell

But thats going to be long time .....................................................

So what Options does he have?????
He will end up selling some assets..Possible
Pros/v/s cons of extra 8500 Crs for 3g
Or a Stake in the company:::::::All likelyhood to his brother for his rollout

But if he sells that will not be below 200 Rs a share(100% from here)
Mukesh Ambani needs his infrastructure... BUT HOW WILL IT BE STRUCTURED????????

Calculate
3G spectrum
2g spectrum
Passive Infrastructure
Flag Telecom
Big dth & Other Rworld stores..the property value

On a conservative basis that would stand @ atleast Rs 200 a share factoring a DEBT OF OVER Rs 30000 cRS .(i.e)@ Enterprise value of 75,000 cRS..

Story is Going to unfold sooner or later.
I feel 2011 is going to be the year.

i Would advise him to demerge his companies and sell a stake in the passive infrastructure biz to Big brother Mukesh Ambani...

His debt would get rationalized and his company would get leaner to taken on his competition in a ruthless manner.


Aditya