Anil Ambani's Reliance Communications looks to raise $1 billion in six months

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RCom had repaid debt worth $1.2 billion during the April-June period. RCom had repaid debt worth $1.2 billion during the April-June period.
SummaryAnil Ambani-promoted Reliance Communications is targeting to raise $1 billion within the next six months by securitising the proceeds from the R12,000-crore

Anil Ambani-promoted Reliance Communications is targeting to raise $1 billion within the next six months by securitising the proceeds from the Rs 12,000-crore tower sharing deal with Mukesh Ambani’s Reliance Jio Infocomm, the company’s senior management said in a conference call with analysts on Wednesday.

“We are considering securitisation of the proceeds under Reliance Jio tower sharing agreement. We aim to complete this in the next six months, which can result in significant reduction in debt,” president of wireless business Gurdeep Singh said on the call.

In a securitisation process, an illiquid asset is converted into a security against which a company can raise funds from financial institutions, after which the financial institution will have the right on the cash flow of the asset.

The company’s debt rose to Rs 41,169 crore as on September, from a level of Rs 38,486 crore as on June 30, 2013. RCom had repaid debt worth $1.2 billion during the April-June period. The increase in debt during the quarter was primarily due to the foreign exchange impact of depreciating rupee. If not for the forex fluctuations, the debt would have been lower by Rs 1,155 crore, the company said.

In July, the debt-laden company had completed the securitisation of proceeds under the R1,200 crore inter-city fibre-agreement that the company had signed with Mukesh Ambani’s Reliance Jio Infocomm. The company had used proceeds from the securitisation to repay rupee debt.

Interestingly, from the quarter RCom has changed its reporting structure by dividing its India business into voice and non-voice operations. On Monday, it reported a net profit of Rs 234 crore during the July-September quarter, that more than doubled from Rs 108 crore in the preceding quarter on the back of lower financial costs.

During the quarter, the company also wrote back a provision of Rs 441 crore that it had made earlier for business restructuring.

Under the telecom tower deal, RCom will share its 45,000 telecom towers across the country for Jio’s 4G venture. Reliance Jio, which is the only company which has a pan-India 4G licence, has plans to launch 4G operations next year.

RCom shares closed up 2.4% at R132.35 on Wednesday on the BSE.

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