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RCOM’s tower and fibre sharing deals with RJIL not giving it expected cash flow, says Deutsche Bank

April 18, 2017

According to a report by the Deutsche Bank, Reliance Communications (RCOM) is not getting the desired cash flow from its tower and fibre sharing agreements with Reliance Jio Infocomm Limited (RJIL).

Further, the report expects RCOM to report losses of Rs 16 billion and Rs 22.50 billion in the next two financial years, owing to the aggressive pricing strategy of RJIL and the lack of cash flows to invest in subscriber acquisition and network expansion. Furthermore, as per Deutsche Bank, RCOM’s revenues 2017-18 and 2018-19 may reduce by 14 per cent and 21 per cent respectively. In addition, the company’s earnings before interest, taxes, depreciation and amortisation (EBIDTA) for both the years are likely to drop by 17 per cent and 21 per cent.

Deutsche Bank has also contended that with numerous partnership agreements, a merger between RCOM and RJIL in the medium term cannot be ruled out.

 
 

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