RCom trades higher on the bourses

Reliance Communications (RCom) is currently trading at Rs. 119.25, up by 0.50 points or 0.42% from its previous closing of Rs. 118.75 on the BSE.

The scrip opened at Rs. 119.70 and has touched a high and low of Rs. 124.10 and Rs. 116.40 respectively. So far 1310504 shares were traded on the counter.

The BSE group 'A' stock of face value Rs. 5 has touched a 52 week high of Rs. 151.25 on 17-Jul-2013 and a 52 week low of Rs. 46.60 on 30-Aug-2012.

Last one week high and low of the scrip stood at Rs. 137.40 and Rs. 114.20 respectively. The current market cap of the company is Rs. 24788.96 crore.

The promoters holding in the company stood at 67.86% while Institutions and Non-Institutions held 19.68% and 12.17% respectively.

Reliance Digital TV, the fully-owned subsidiary of Reliance Communications that runs its direct-to-home (DTH) operations, will merge with Sun Direct to become India''s second largest DTH company. Under the deal, Reliance Communications (RCom) will have 26 per cent stake in the merged entity. The merged company would also take over about Rs 1,500 crore of debt from Reliance''s DTH operations. As of June 30, RCom''s total debt stood at Rs 38,400 crore. As part of the deal, Sun Direct will later go for an initial public offering. Reliance would then exit the merged company. According to sources close to the deal, RCom has valued the 26 per cent stake at around Rs 1,500 crore.

The deal would help the Anil Ambani-led Reliance Group reduce RCom''s debt by Rs 3,000 crore. After the deal, management control would shift to the Marans, who own Sun Group. Reliance DTH has a gross subscriber base of 4.1 million. It runs 260 channels on high-density format. Sun Direct has a subscriber base of about 8.5 million. Dish TV is the largest company in this segment, with a gross subscriber base of 15 million. Other major players include Tata Sky (about 11.5 million subscribers), Airtel and Videocon D2H. The country's total DTH subscriber base rose from 28.7 million in December 2011 to 32.4 million in December 2012. The deal is vital for Sun Direct, which has strong presence in the south, but not in the north and west, where Reliance has a large subscriber base. It also marks the beginning of consolidation in the DTH business, now facing tough competition from digital cable TV operators, especially after the government mandated subscribers and multiple system operators to shift from analogue to digital technology.The deal would help RCom restructure, get out of its non-core businesses and use the proceeds to reduce debt. The company is expected to sell majority stake in Reliance Globalcomm, which controls its submarine cable assets worth Rs 6,000-7,000 crore. RCom has signed long-term agreements with Mukesh Ambani-controlled Reliance Jio Infocomm. According to the deal, Reliance Jio would pay RCom Rs 12,000 crore to use its tower infrastructure. Sun Direct, an 80:20 joint venture between the Maran family and Malaysia''s Astro Group, specialises in catering to regional tastes, through MPEG-4 technology. After its launch in Tamil Nadu in December 2007, it expanded to other southern states, hitting the one-million-subscriber mark in less than 200 days. In September 2008, it rolled out pan-Indian operations.