Newman Asset Downgrades Reliance Communications

Online, April 19, 2013 (Newswire.com) - Newman Asset, a US based crowdfunding agency which recently forayed into the Indian equity research advisory has downgraded Reliance Communications (BSE:RCOM) and has retained sell call on the counter. According to the Newman Asset, RCOM may touch INR 68.50 in the short term as its INR 1,200 crore deal with Mukesh Ambani's Reliance Jio may not go ahead immediately. According to the Newman, Mukesh Ambani has failed to put concrete plan in action after its announcement to foray into the telecom sector last year.

"RCOM is found weak on every ground, our independent research has shown that the network quality is deteriorating, unprofessional customer support staff, no attractive schemes and poor average revenue per user will heavily impact the company. Technically, RCOM should be avoided by long term investors and even the short term or day traders should maintain a distance as the entire telecom sector has opened war on each other which may result in some more scams emerging up. With no clear signals from the government of India, we are negative on entire telecom sector especially RCOM," said David Ramos, senior research analyst with Newman Asset.

Anil Ambani led RCOM has seen many downturns after Mukesh Ambani exited the telecom in the year 2005. RCOM has huge debt on its books which may paralyze the operations of the company any time.

RCOM is still heavily relying on the CDMA technology when other GSM operators are planning to launch 4G services. The customer loyalty of RCOM CDMA customers is found much higher than RCOM GSM customers.

"I have been using both Reliance CDMA and GSM services for the last five years, the CDMA network seems to be fine, not that good but the GSM network is full failure. The network coverage is really weak followed by unnecessary money deduction and abusive customer support," said Amit Tiwari, a customer of RCOM interviewed by Newman Asset.