1. Worried over repayments, bankers look to nudge Reliance Communications into debt restructuring

Worried over repayments, bankers look to nudge Reliance Communications into debt restructuring

Attempts at reviving RCom, the most-leveraged Indian telecom service provider, have started gathering pace with the lenders of the company, under the aegis of SBI, working on a plan to rejig the debt of the beleaguered telecom major.

By: | Updated: May 31, 2017 5:15 PM
Anil Ambani, Reliance Communications Ltd, wireless operator, repay debt, 0 million, junk rated note, Hong Kong, stock sank, Fitch Ratings, Lucror Analytics, liquidity crunch Reliance Communication has delayed repayment of loans to more than 10 banks and plans to repay Rs 25,000 crore worth of loans to its lenders with proceeds from its deals with Aircel and Canada’s Brookfield Infrastructure. (Image: PTI)

Attempts at reviving Reliance Communications (RCom), the most-leveraged Indian telecom service provider, have started gathering pace with the lenders of the Anil Ambani-promoted company, under the aegis of State Bank of India (SBI), working on a plan to rejig the debt of the beleaguered telecom major, reported ET Now citing unnamed sources.

RCom has reportedly delayed repayment of loans to more than 10 banks and plans to repay Rs 25,000 crore worth of loans to its lenders with proceeds from its deals with Aircel and Canada’s Brookfield Infrastructure. RCom is merging its wireless business with rival Aircel and is also selling a 51 percent stake in its radio masts business to Canada’s Brookfield Infrastructure Group for Rs 10,000 crore. Gurdeep Singh, CEO, Consumer Business, Reliance Communications, said that as a part of the company’s plan reduce debt further, Anil Ambani group’s office complex in the erstwhile Ranjit Hotel (near Connaught Place) in Delhi, and the sprawling Dhirubhai Ambani Knowledge City (DAKC) in Navi Mumbai are on the block.

The joint lenders’ group is looking at Strategic Debt Restructuring (SDR) route to gain greater control in decision-making at the company, which will help to close deals in a speedy manner. Joint lenders are likely to meet this week to finalise advisors for the SDR.

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RCom, which can be credited with bringing the mobile telephony to masses in India, has now been reduced to a languishing player in desperate need for revival options. Over the years, RCom’s low-cost offerings have dragged its performance down while the Indian telecom sector has grown as a whole. RCom has failed to garner high-revenue subscribers for its services and as a result has not been able to grow in sync with the rest of the telecom industry. The company has not even been able to keep its flock of low revenue subscribers together and lost a majority of them to other operators.

So, while the other operators have gained in terms of market share and revenue, RCom has slowly bled to its current state. The company’s revenues from wireless telecommunications services, broadband access to enterprise customers, managed internet data centre services, and direct-to-home (DTH) businesses have stagnated, which has hurt its operational and financial performance while its costs have kept increasing. Further, the weak performance of its global network operations unit and mounting debts and associated interest costs have also weighed it down.

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