The scrip of Reliance Communications hit a 52-week low on Thursday, on concerns of Mukesh Ambani-led RIL is entering the telecom sector.
RIL group company Infotel Broadband is planning to offer cheaper data and voice services soon.
RCom hit a low at Rs 52.85 on the BSE during intra-day trade. The stock closed at Rs 53.95, down 0.64 per cent from its previous close.
“The stock’s fall was triggered by the concerns of RIL offering lower data and voice services. Debt also continues to loom at RCom. The overall uncertainty in the telecom sector is affecting the stock to some extent,” said Dharmesh Pancholi, Senior Manager — Advisory (Equity), Sharekhan.
All is not well for RCom at present. Increased debt concerns and overall uncertainty in business operations is pulling the stock down, say analysts.
RCom’s downfall has been largely on the back of repeated unsuccessful efforts of fund-raising to help reduce its debt. With over Rs 35,000 crore debt on its books, RCom is losing flavour among investors.
Striving to reduce debt
“Currently, the company is striving to reduce the debt level in its books and has again maintained its stance of possibly selling stake in its tower assets, which might help the company to deleverage its balance sheet and reduce debt,” said a note from Angel Broking.
Earlier, RCom tried to raise funds by selling stake in its tower business to a strategic partner.
RCom had plans to list its sub-sea telecommunications network business, Flag Telecom, on the Singapore Exchange. Recently, the company put the proposed $1-1.5 billion Initial Public Offering on hold, due to global uncertainties.
Analysts also pointed out that investors also remember the report by Canadian research firm, Veritas, which raised doubts on RCom’s accounting and governance practices.