By Sankalp Phartiyal and Devidutta Tripathy
MUMBAI Anil Ambani, chairman of Reliance Communications, said on Friday he expected to complete two key deals to cut debt by September and that lenders had given the telecoms firm until the end of 2017 to overhaul its business.Once the flagship of Ambani's business empire, RCom's market value has slumped by a third since early May, battered by concerns over the company's ability to repay its debts as wafer-thin margins and brutal competition hit its profits.In a rare media appearance, the 57-year-old billionaire sought to reassure investors and lenders but the company also called for state support for the sector.It warned of dramatic job cuts in a telecoms industry shaken by costly airwave auctions and price wars triggered by the arrival last year of Reliance Jio Infocomm Ltd, run by Anil's elder brother.
Jio, owned by Mukesh Ambani's Reliance Industries, has brought the sector to its knees offering free voice and data for months. Almost all of India's mobile operators posted a loss in the first quarter and the one exception, Bharti Airtel Ltd, recorded its smallest profit in four years."We had a meeting of all the lenders for RCom and presented our plan for the strategic transformation and I am happy to report that our plans have been accepted by the lenders," RCom's Ambani told a media briefing. "We have a large number of options in front of us and we will consider each one of them."
Ambani said RCom would complete the merger of its wireless division with a rival and the sale of a stake in its mobile masts business by September, helping to cut its debt 60 percent by repaying 250 billion rupees ($3.9 billion).RCom has also been given a debt servicing holiday, or standstill, until the end of December, he said, to allow India's seventh-ranked telecoms carrier by customers to restructure.
Fears about RCom's debt loads have intensified this week, sending shares to a series of record lows. Its bonds have tumbled too. On Saturday, RCom posted a second consecutive quarterly loss and two ratings agencies cut its ratings further into junk territory this week.The loss has reinforced concerns about RCom's ability to service nearly $7 billion of net debt - including local and foreign currency loans and bonds - or more than nine times its operating earnings for the year to March.At its peak, RCom was a dominant player in India's telecoms sector but is a now small operator in a rapidly evolving sector. Its shares closed down 0.5 percent at 20.65 rupees on Friday, a fraction of the record high of 845 rupees hit in 2008. (Additional reporting by Promit Mukherjee and Swati Bhat; editing by Clara Ferreira Marques and David Clarke)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Published Date: Jun 02, 2017 09:45 pm | Updated Date: Jun 02, 2017 09:45 pm