We believe poor first quarter earnings and balance sheet concerns have been priced in. We value RCOM by DCF and EV/EBITDA as earnings are overstated due to capitalisation of interest, high CWIP, tax gains and low depreciation.

• RCOM test launched its GSM network confirming our channel checks that GSM roll-out on track.
• RCOM will gain market share as it has a higher market share in CDMA + GSM circles compared to CDMA only.
• Reiterate Buy with a TP of INR500; we believe negative news on earnings and balance sheet priced in.

Soft launch of GSM service confirms roll out on track

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