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Rcom analysis for SP tulsian : means 2-3 shares of GTL for 5 shares of RCom

Reliance Communications (RCom), has decided to merge its 50,000 telecom tower assets, owned by its 79.7% subsidiary Reliance Infratel (RInfratel), with GTL Infrastructure’s 33,000 towers, to create the world’s largest independent tower company, not owned or controlled by a telecom operator.







Below is an analysis of the merger and the possible structuring of the transaction.



Towers Rcom, through RInfratel GTL Infra (present) GTL Infra

(post merger)

No of towers 50,000 33,000 83,000

Tenants 87,500 39,600 125,000

Tenancy ratio 1.75 1.20 1.51



Present Equity Details RCom RInfratel GTL Infra (present)

In Rs. Crore

Equity 1,032 957.35

FV 5 10

No of shares 206.4 95.7

Market Price (Fri 25th June's closing price) 193.0 45.0

Market Cap (based on Friday's closing price) 39,836 4,308

Debt 33,000 18,000 4,500

Cash Not available 154 460

EV (present) 72,836 8,348



Present Shareholding Pattern RCom RInfratel GTL Infra (present)

ADAG 67.58%

RCom shareholders 32.42%

RCom 79.71%

Other ADAG Group Cos 15.29%

PE investors in RInfratel 5%

Manoj Tirodkar Group 53.42%

Other GTL Infra shareholders 46.58%



Deal Details RInfratel GTL Infra (present)

In Rs. Crore

Enterprise Value (Assumed in proportion of no. of towers) 30,000 20,000

EV/ tower 0.60 0.60

Less: Debt 18,000

Equity value of RInfratel 12,000

Mode of Settlement:

- Cash to RCom - Note A 5,500

- Equity shares in GTL Infra of Rs. 10 each - Note B 6,500



Note A:

How will GTL Infra raise cash to pay RCom? 5,500

(i) Fresh equity shares of Rs 10 each to GTL Infra promoter @ Rs. 45/sh 2,250

- No. of new shares to be issued 50.0

(ii) Debt / term loans (balance) 3,250



Note B:

No. of new shares to be issued by GTL Infra 144.44

(valued at Rs. 45/sh)

Breakup of new shares:

(i) to ADAG (for Rcom holding) 53.87% 77.81

(67.58% of 79.71% holding of Rcom in Rinfratel)

(ii) to RCom shareholders 25.84% 37.33

(32.42% of 79.71% holding of Rcom in Rinfratel)

(iii) to other ADAG companies (for Rinfratel holding) 15.29% 22.09

(iv) to RInfratel PE investors 5% 7.22



Swap Ratio for RCom shareholders

No. of shares to be issued to RCom (i + ii above) 115.14

Existing no. of Rcom issued shares 206.4

No. of GTL Infra shares per Rcom share 0.56 0.56

Present RCom share price has value of Rs. 25 per share towords the tower deal



In Jan 2010, GTL Infra has acquired 17,500 towers from Aircel,in an all cash deal, at an EV of Rs 8,400 crore i.e. EV Rs 48 lakh/tower. The company was to fund this acquistion through equity and debt.





Aircel towers acquisition In Rs. Crore

Deal Value 8,400

Less: Funds accounted for by GTL Infra till 31st March 2010 1,815

Balance to be raised by GTL Infra 6,585

(i) Fresh equity to GTL Infra promoter @ Rs 45 per share 2,385

- No of new shares to be issued 53.0

(ii) Debt / term loans 4,200



GTL Infra can raise limited loans to fund Aircel tower acquisition, as it has debt of Rs. 4,500 crores as on 31-03-10 on its books, besides Rs. 18,000 crore from RInfratel; and it will have to raise further debt to pay cash to RCom.







GTL Infra (post merger) In Rs. Crore

No. of shares (existing + Note A + Note B + Aircel acquisiton) 343.18

FV 10

Equity (new) 3,432

Debt (existing + Note A + Rinfratel debt + Aircel acquisiton) 29,950

Networth (existing + Note A + Note B + Aircel acquisiton) 12,906

Debt Equity Ratio 2.3

EV 50,000

Less: Debt 29,950

Expected Market Cap 20,050

Expected Market Price (Rs/sh) 58.4



Expected Shareholding Pattern of GTL Infra % holding No of shares

ADAG 29% 99.89

RCom shareholders 11% 37.33

PE investors in RInfratel 2% 7.22

Manoj Tirodkar Group 45% 154.14

Present GTL Infra shareholders 13% 44.59

Total 100.0% 343.18

Rcom shareholder will get 2-3 GTL infra shares free per the deal estimats

As part of the GTL deal, over 2 million shareholders of RCOM and the minority shareholders of Rel Infratel are set to receive free listed


shares of the merged entity. ‘‘ The swap ratio is expected to be in the range of 2-3 shares of GTL Infra for every one share of RCOM, and will depend on the quantum of debt that is reduced in Rel Infratel,’’ sources told TOI. A detailed picture would be available within the next three weeks, the sources added.



Though the exact financial details of the deal are not immediately available, it is learnt that the deal is not based on the exact number of towers that RCOM owns but the tenants on those towers. The current and future tenants of RCOM’s towers are said to have enabled a deal size of Rs 48 lakh per tower.



With the 50,000 towers owned by RCOM, the deal pitches GTL Infra into the No. 2 slot in India with a combined total 80,000 towers, behind Indus Towers’ 1 lakh telecom towers. As against GTL, which is an independent and neutral firm, Indus is a consortium owned by leading telecom companies, including Bharti Airtel, Vodafone Group and Idea Cellular. The owners of Indus have pooled their assets to form the firm. GTL, on the other hand, continues to remain independent and neutral.



Upon closing, the merged entity will have over 80,000 towers and over 1,25,000 tenancies from over 10 telecom operators. The interests of RCOM as the largest tenant of the merged entity have been adequately protected through appropriate contractual arrangements, sources said. Sources said RCOM decided to ink the deal with GTL because of ‘‘ the benefits of scale that would be immediately available, as well as enjoying the future benefits when more tenants get added onto the towers’’ .



The fact that GTL is an independent tower company also helped swing the deal in its favour. Globally, Crown Castle and American Tower Corporation are among the few telecom firms that are not controlled by telecom operators . ‘‘ Though infrastructure sharing is the norm with most operators as of now, having a neutral, independent stand favours faster deployment and investment optimisation ,’’ an analyst with a brokerage house said.
Source : Economic times.
 
 
Still More Good news is in line as after that Rcom may hiveoff DTH IPTV business and after that it will look for 26% strategic investor. so Three Cheers  for RCOM and RCOM Shareholder

RCOM will zoom to 250 hold it hold it tight

RCOM is ruling at 190 it will sure hit 250 here is why.



1. They are hiveing off DIsh TV and IP Tv business into separate company value unlocking.

2. Reliance infratel is going to become separate company where rcom will be minority share holder and every rcom holder will get share due to demerger.

3. Once these 2 items will be done Rcom will announce 26% stack sell why after these 2 events because after that there will be 0 or very minimal debt in rcom book so it will help in fetching new strategic investor in to rcom.

4.Its share will not go below 225 after that because its book value is around 250.

5.Once stack sell is done WAIT there is one more item for share holder of rcom after 26% stack sale it will trigger an open offer to market and it will be above market premium so Gold is coming BABY from RCOM.

Safe investments for seniors

Retirement investment planning has acquired urgency in recent times due to the uneasy combination of high inflation (double-digit growth) and weak interest rates (7 to 8 per cent). Investment options on retirement often stand reduced, as capital protection and liquidity start assuming higher priority. Besides, returns post-tax should be able to beat inflation.

Given the thrust on capital protection in retirement planning, fixed income instruments often become the core of any retiree's portfolio. This despite negative returns in the current situation, with inflation rates exceeding returns on fixed income instruments. However, this may not persist for too long. Given below are some popular investment options that may be suitable for the retired or those nearing retirement.
Senior Citizens Savings Scheme
Considered among the best investment options for senior citizens, this scheme offers an interest rate of 9 per cent per annum, with quarterly interest payouts. Individuals above the age of 60 (55 in certain cases of retiring employees) are eligible to make deposits (minimum of Rs 1,000 and up to Rs 15 lakh). The scheme has tenure of five years extendable by three years.
Premature withdrawal is permitted after a year although with penal charges. Deposits under this scheme are eligible for deduction under Section 80C of the Income-Tax Act. Interest payment is taxable and TDS will be applicable, if interest payment exceeds Rs 10,000 annually.
High level of safety (being a government scheme), high liquidity, and attractive interest rates (currently) are the positives of this scheme. The tax sting is a negative. Senior citizens should consider allocating a portion of their corpus to this scheme.
Post Office Monthly Income Scheme
The scheme gives monthly interest payouts at 8 per cent per annum and also entitles depositors to 5 per cent of the deposit amount as bonus at the end of the maturity period of six years. The minimum deposit is Rs 1,500 while the maximum is Rs 4.5 lakh in a single account and Rs 9 lakh in a joint account. While the interest is taxable, TDS is not applicable on returns. Premature withdrawal, albeit with penal charges, is allowed after a year. High safety levels, monthly income flows, and relatively attractive returns make this scheme a good fit in the retirement portfolio.
National Savings Certificate (NSC)
With a return of 8 per cent per annum on a half-yearly compounding basis, the certificate allows individuals to invest a minimum of Rs 500 (no maximum limit) for six years. Interest gets accrued, and similar to the original investment, it is eligible under Section 80C. While this investment option operated by the post office yields relatively good returns and offers high safety, it suffers on the liquidity parameter, as the interest does not get paid out at regular intervals and there is no facility for premature encashment.
Kisan Vikas Patra (KVP)
Doubling money over eight years and seven months, the post office-run scheme yields around 8.4 per cent pre-tax, compounded annually. The deposit amount can be as low as Rs 100 with no maximum limit. Interest is taxable, though TDS does not apply. Premature encashment facility is available after two years and six months, though at a discount. The KVP scheme scores fine compared with most other post office schemes on the safety and returns parameter. However, it has limitations on the liquidity and taxation front.
Public Provident Fund (PPF)
The fund is popular with retirees mainly due to its taxation benefit, safety factor and deposit flexibility features. The scheme runs for 15 years, offers tax-free 8 per cent interest compounded annually, and the deposit amount (minimum and mandatory Rs 500 and maximum Rs 70,000 annually) is eligible for Section 80C benefit. However, the fund scores low on liquidity with interest accruing, and first withdrawal permitted only after seven years.
Bank Fixed Deposits
Bank deposits, a long-time favourite among senior citizens enjoys relative safety (deposits up to Rs 1 lakh are insured), additional returns (0.25 per cent to 0.50 per cent extra for senior citizens) and good liquidity options (premature withdrawal possible and regular interest pay-out option). However, interest is taxable, TDS is applicable and only deposits for five years and more qualify under Section 80C deduction. Currently, these deposits could yield senior citizens around 8 per cent annually for tenures up to three years.
For retirees and potential retirees who have the willingness and the ability to take some risk, the following options could be a good fit.
Corporate Fixed Deposits
Corporate deposits for tenures up to three years could offer up to 12.5 per cent annually for senior citizens. They usually have regular interest payment options and allow premature withdrawal at a cost. However, interest is taxable and TDS is applicable. Senior citizens would do well to stick to deposits of corporates that have high credit ratings (for instance, AAA).
Fixed Maturity Plans
The plans are close-end schemes offered by mutual funds across various tenures based on the prevailing interest rate scenario. While the funds indicate the universe in which they are likely to invest and the indicative yields of such instruments, there is no guarantee by the fund to provide a fixed rate of return. FMPs typically match the returns of the underlying debt instruments.
While returns may be better than traditional deposit options, the investments may involve credit risk. They also attract capital gains tax.
Monthly Income Plans
Several mutual funds offer regular income payouts through monthly income plans. Such schemes deploy invested funds predominantly in debt instruments, and a small portion in equity which may deliver the “kicker” to returns, when market conditions are favourable. Monthly Income Plans are market-linked, entail risk and do not assure returns. However the dividends are tax free, though capital gains are taxable.
Optimal Choices
In all these options the interest rate might seem attractive, but many of them slip on a post-tax return basis. Investors should always keep tab of this before making an investment choice.
An analysis of post-tax returns (assuming a tax slab of 20 per cent and also factoring in Section 80C tax benefits) of the high-safety instruments (except bank deposits), throws up NSC as the most rewarding option with an annualised yield of 12.07 per cent. Senior Citizens Savings Scheme comes a close second with 11.20 per cent, followed by PPF (9.62 per cent). KVP and post office MIS yield 7.09 per cent and 6.07 per cent respectively.
NSC emerges as the optimal choice for senior citizens who do not have liquidity constraints and have other sources of regular income. However, the high liquidity offered by Senior Citizens Savings Scheme makes it optimal for the elderly who would like to receive regular income flows.

PowerGrid FPO

PowerGrid FPO in 6-8 months
NEW DELHI: State-owned PowerGrid Corp on Tuesday said it will hit the capital market with its follow-on public offer (FPO) in the next 6-8 months.
“Our FPO can be expected in the second quarter of the next financial year (2010—11),” CMD PowerGrid Corporation S K Chaturvedi told reporters here. The company plans to raise Rs 3,000 crore through this offer.
The FPO would comprise partial stake sale by the government and also issue of some fresh equity.
“We plan to raise some fresh equity through this FPO but how much I cannot say right now...Power Ministry will take up our FPO after it is done with NTPC and REC,” Mr Chaturvedi added. The government holds 86.36 per cent stake in PowerGrid Corp.
Earlier, the company had indicated plans to infuse 15 per cent fresh equity through the forthcoming FPO. - PTI

bejan daruwala's market predections

Happy New Year to all blog reader.........

Here i will come up with investment ideas of 2010.