Not just real estate sales, Reliance Communications may cut 6,000 jobs to reign in costs

Billionaire Anil-Ambani-led Reliance Communications, which is on a major debt-reduction drive by divesting stake in non-core assets in order to focus on its core wireless and enterprise business, is not only selling its real estate assets worth Rs 2,000 crore to part repay its debt but is also cutting down its workforce by 37 percentby outsourcing its call centre and sharedservices operations in a restructuring move.

A repor t in the Economic Times on Monday said that around 6000 employees of RCom’s 15,000 strong workforce willmigrate to the rolls of two third-party service providers once it outsources its BPO and shared services operations.

There are alsoreports that the company was to pare debt by initiating talks to sell its international and direct-to-home TV businesses.

In the last four years, RCom’s debt has doubled to Rs 40,117.6 crore and according to a report in th e Business Standard, the company has already met with India’s leading realty consultants to find buyers for the ten properties that are being put on the block.

The properties on sale includes the company’s 3.7-acre Delhi office near Connaught Place, which is expected to fetch Rs 700 crore as well as Kolkata’s Chowringhee Road property valued at over Rs 150 crore, Navi Mumbai’s 7 Towers valued at Rs 200 crore, the report said. ( Read details here) .

Last year, the Mint had reported thatReliance Communications has put about 100 flats in upscale NRI Seawoods Complex in Nerul, Navi Mumbai, on the block. The price of these apartments ranged between Rs 1.2 crore and Rs 2.5 crore. The sale of apartments was also part of this monetisation drive.

Apart from the sale of its properties, RCom is likely to receive another Rs 3,000 crore by developing a commercial and residential space in the Dhirubhai Ambani Knowledge Centre (DAKC) on the outskirts of Mumbai.

Earlier this week, RCom raised Rs 4,800 crore from its stake sale to institutional investors. The company, together with a Rs 1,300-crore share sale to promoters, will raise a total of Rs 6,100 crore which will also be used to pay its rupee debt. The company received total bids worth Rs 12,000 crore, mainly from US funds with a long-term investment view.

Riding on the back of a euphoric market, the deal is the largest ever equity deal by a private company in India and is a positive for RCom since in the past too thecompany had announced several debt reduction measures but had not seen any significant headway.

Meanwhile, the company’s overall subscribers for the sector have grown from 812 million in FY11 to about 903.3 million by the end of FY14 but the company has registered a de-growth in the subscriber number from the peak of 153 million in FY12 to 112 million subscribers in the current quarter, noted an ICICI Securities report.

“Consequently, voice volumes have grown marginally at a CAGR of 3.2 percent from 374 billion in FY11 to 412 billion minutes in FY14 while that for Airtel and Idea have grown at a CAGR of 6.1 percent and 17.4 percent to 1029 billion and 588.2 billion minutes, respectively. Moreover, RCom’s revenue share has more than halved from 16.1 percent in Q1FY08 to 6.9 percent in Q4FY14. Deteriorating competitive positioning and operating performance of the company continue to remain a cause for concern,” the report added.