Reliance Com: From dud to ‘outperform’

The Indian telecom giant has performed a quick U-turn after a new deal it struck.

Written by Agencies | Mumbai | Published: June 28, 2010 3:06 pm

The Indian telecom giant has performed a quick U-turn. Macquarie Capital Securities raised its rating on Reliance Communications to outperform from underperform on Monday,after the No.2 Indian mobile operator agreed to merge its telecoms towers business with that of GTL Infrastructure Ltd.

We believe this is a significant positive catalyst for RCom and positive for RCom’s shareholders,as it sets the company up for focused execution of its access and wholesale businesses,analyst Shubham Majumder said in a note obtained by Reuters.

It also gives the power to RCom shareholders to continue to participate in the towers growth story in India through a significantly improved,much larger and focused vehicle.

The brokerage rates Reliance Communications as its only positive pick in the Indian telecoms sector.

Reliance Communications had said on Sunday the deal would create the world’s largest telecoms infrastructure firm not controlled by an operator.

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