Reliance Communications Ltd. is
acquiring Sistema Shyam Teleservices Ltd Wireless business for equity worth Rs.
2,100 crore. It has also committed to paying Sistema liabilities to the
government, the present value of which is Rs. 2,400 crore. R-com has paid three
times Sistema annual revenues of Rs. 1500 crore.
This is much higher than Bharti
Airtel Ltd and Idea Cellular Ltd enterprise value of sales valuation of around
2.2 times. While these companies have operating profit margins of over 30%,
Sistema reported operating losses were over 30% of its revenues. Sistema holds
800 Mega Hertz spectrums in eight key circles, which can be extremely valuable
for Reliance Jio.
Sistema will be launching its LTE
Services, including voice over LTE, with much wider coverage, vis-à-vis spectrum
in higher frequency bands. Sistema holds spectrum in lucrative circles such as
Delhi, Gujarat, Tamil Nadu, Karnataka and Kolkata. Sistema spectrum in these
eight circles is worth Rs. 7,955 crore. Not all of this will necessarily flow
into R-com books, even if Reliance Jio agrees the price.
This is because the government
spectrum trading guidelines includes a clause that states that for any spectrum
acquired in the March 2013 auction trading will be permitted only if the price
differential the latest price auction price is paid.
No comments:
Post a Comment