Company Update: Reliance Communications

Company Update: Reliance Communications

Reliance Communications (RCOM) may be considering bidding for Iran’s third mobile phone service licence, estimated to cost around $1 billon (Rs4,880 crore).

The telco will compete with firms from Russia, Turkey and Malaysia for the tender, the bids for which will be called within a month, according to Iranian government officials. It will cover 5mn customers in the first phase, 10mn in the second and 15mn in the third phase.

Other prospective bidders for the third licence include Qatar Telecom. The two existing operators in Iran are state-owned Telecommunication Co. of Iran and MTN Irancell, which is 49% owned by the South-Africa-based MTN Group, Africa’s biggest phone firm.

It should be noted that company sources have declined to comment specifically on a potential bid for the Iran licence.

At the CMP, the stock is trading at a P/E of 6.4x FY2010E EPS. We maintain a BUY with a target price of Rs451.