Mumbai Capital

Outlook positive for Ambani telcos: Credit Suisse & CLSA

The Ambani brothers – Mukesh and Anil – have got a glowing report from Credit Suisse and CLSA for their respective telecom companies (telcos). In its latest report, Credit Suisse says Reliance Jio is turning out to be “a strong threat to incumbents”, while CLSA has rated Anil Ambani’s Reliance Communications (RCom) as ‘outperform’, thanks to the company’s decision to reduce its debt by up to 60 per cent by selling tower assets.

Credit Suisse said its evaluation of RJio’s 4G network and its first instalment of services revealed that its network in urban areas is at par with others.

It assessed RJio’s 4G field trials in and around Mumbai after the company began beta-testing by issuing connections to employees and friends.

“RJio network is turning out to be as strong a threat to incumbents as we had feared,” the Credit Suisse report, published on Monday, said.

“Next focus would be on pricing and marketing execution. We see the market being surprised negatively on telco stocks.”

RCom, meanwhile, has been rated ‘outperform’ by CLSA and its share price revised to Rs 90 a share implying a valuation of $3.4 billion for its tower assets.

Anil Ambani’s RCom is also likely to benefit from Mukesh Ambani’s RJio services, according to CLSA. “In addition to multiple infrastructure sharing deals with Reliance Jio (towers and fiber), RCom is also finalising a spectrum sharing and trading deal with Reliance Jio for its 800MHz spectrum.

This deal with RCom is crucial as it would ensure a pan-India footprint on 800MHz, thus boosting its 4G LTE services,” the report said.

RCom had recently signed a term sheet with Tillman and TPG for the sale and leaseback of its 43,400 towers held by its 95 per cent subsidiary, Reliance Infratel. While this is non-binding, the deal appears inevitable given RCom’s compulsions to deleverage and the quality of the assets, according to CLSA analysts.



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Printable version | Nov 26, 2020 9:09:44 PM | https://www.thehindu.com/news/cities/mumbai/business/outlook-positive-for-ambani-telcos-credit-suisse-clsa/article7989890.ece

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