In a post-earnings conference call with analysts on August 14, RCom said it will generate fresh funds by securitising future receivables from the recently struck tower tenancy deals with Mukesh Ambanis Reliance Jio Infocomm, further disposal of non-core assets and monetisation of real estate. The company also plans to conclude a stake sale in its undersea cable business, Reliance Globalcom, in 90-120 days, said Vinod Sawhny, RComs chief executive officer.
RCom has been trying to sell some stake in its undersea cable unit for quite some time now, but it hasnt been able to do so. An earlier plan to list the unit as a business trust in Singapore also fell through.
RCom plans to raise around $1 billion by securitising future receivables from Reliance Jio Infocomm, with which it has signed multiple deals to lease out telecom infrastructure such as its optic fibre cable network and telecom towers. Reliance Jio, a subsidiary of Reliance Industries, will launch fourth-generation broadband wireless services in India in FY15.
Our tower deliveries are in progress and once we complete the handover to Reliance Jio, we will take proceeds from the annuity rental income of the 15-year deal, worth $2 billion, to our bankers and securitise it, Sawhny said. We should be able to raise or attempt to raise over $1 billion through that.
RCom, Indias fourth-largest telco by subscribers and revenues, had a net debt of R35,500 crore on June 30, compared to R40,178 crore on March 31.
In June, the company had raised around R6,100 crore ($ 1 billion), comprising a qualified institutional placement of shares worth R4,800 crore and fresh investment by promoters to the tune of R1,300 crore. The entire proceeds from this fundraising exercise will be used to repay debt as well.
We are currently engaged in a strategic discussion (for a stake sale in Reliance Globalcom) and we hope to conclude that transaction over the next 90-120 days, Sawhny added.
RCom plans to raise another R5,000 crore by monetising its real estate assets, which include a portion of the 135 acre-Dhirubhai Ambani Knowledge City in Navi Mumbai, and a property in Delhi.
RComs plans to raise funds to deleverage its balance sheet have not been successful in the past. In 2010, it announced its intention to sell its telecom tower assets to Mumbai-based GTL Infrastructure, but the deal fell through later that year. Over the last two years, there have been reports of private equity firms like Blackstone and Carlyle evincing interest in RComs telecom tower assets, but it didnt lead to any deal either.
Some analysts are bullish on RComs prospects going forward. An Axis Capital report dated June 19 said that having consolidated its position, the company is now best placed to gain incremental market share led by payoffs from market segmentation strategy, de-leveraging, acceleration in data growth, and higher voice tariffs.