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Thursday, December 1, 2011

RCom at its life time low levels


Rcom at its life time low levels


Rcom (Reliance Communications), telecom venture of ADAG (Anil Dhirubhai Ambani group) is trading at its life-time low levels. In 2007 Rcom even traded at 800 levels and then retrace to present sub-80 levels.
Incidentally Rcom is India’s second-largest mobile phone operator in terms of subscribers with 147 million customers as of September 2011. The company reported a 43 percent drop in net profit to 2.5 billion rupees for the quarter ending September 2011
Rcom is debt-ridden company with gross debt aggregating to Rs. 33,700 as of September 2011.
Company has been in the process of raising funds by selling its tower company.
3G licensing fees and launching of 3G services were significantly responsible for the piling-up of the debt. As the gestation period of such ventures is usually longer and apathy of subscribers for premium value-added services are major bottlenecks for break-even of 3G project.

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