RComm shares gain over 16% after telecom deal

RComm shares gain over 16% after telecom deal

After gaining more than 10 per cent on Tuesday, stock in Reliance Communications (RComm) gained again nearly 6 per cent in the early morning trade today (Wednesday), thanks to a telecom deal with Reliance Jio Infocomm.

On Tuesday, Anil Ambani's Reliance Communications announced that it had hit a fibre optic network sharing deal with Reliance Jio Infocomm, a unit of Mukesh Ambani's Reliance Industries Ltd (RIL).

The announcement encouraged investors as the investors as well as industry experts are seeing the deal as benefiting for both companies.

In the after-hours trading, Reliance Communications; shares jumped 10.86 per cent to Rs 63.30 on the Bombay Stock Exchange (BSE). It was the stock's highest level in nearly two weeks. The stock rose as much as
17% in intra-day trading.

However, stock RIL could gain just 2 per cent to close at Rs 793.95 a share on Tuesday.

The deal is a smart move by Mukesh Ambani's Reliance Jio. By entering into an agreement with Reliance Communications for using 120,000 kilometers of inter-city OFC by paying one-time charge of Rs 1,200 crore. The company will pay Rs 1 lakh per kilometre, which will cost the company much lower than what it would have to pay in case it would build its own network.

Following the end of their non-compete agreement in May 2010, it is the first time when the Ambani brothers have teamed up to pursue a business operation.

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