RCom AGM: Ambani hopes to sell tower biz next yr, lower debt by FY15

Ambani said the company aims to improve capital productivity, monestise assets to increase revenue growth, become the lowest cost service provider, apart from unlocking value in RInfratel and listing Reliance Flag on Singapore Exchange.

FP Staff September 04, 2012 17:16:40 IST
RCom AGM: Ambani hopes to sell tower biz next yr, lower debt by FY15

Billionaire Anil Ambani today reassured shareholders of his flagship telecom carrier Reliance Communications that the company is pursuing options to reduce its heavy debt , sending its stock up by more than 5 percent.

India's second-biggest telecom carrier by customer is saddled with debt of Rs 35,000 crore as of June. This debt is 10 percent of the cumulative Rs 3.5 lakh crore debt of the entire telecom sector.

RCom has so far been unsuccessful in its efforts to raise funds through asset sales.

RCom AGM Ambani hopes to sell tower biz next yr lower debt by FY15

Reuters

A planned sale of its telecom tower unit Reliance Infratel has dragged on for nearly two years. In July, Reliance Communications shelved a Singapore initial public offering of its undersea cable unit due to weak investor appetite.

"Hopefully in 2013 we will be able to conclude a value-unlocking strategy for Reliance Infratel," Ambani, India's seventh-richest man according to Forbes ranking, said at the company's annual shareholder meeting. RCom sold a 5 percent stake in the unit to international investors in July 2007. It is continuing to evaluate strategic options, including a sale or a listing, for the subsidiary.

Ambani also said they would have a "fair visibility" of the number of operators in the Indian market and the potential demand for telecom towers after an airwaves auction is completed in January next year.

Ambani also spoke about a four-step strategy to bring down Reliance Communication's debt. He said the company aims to improve capital productivity, monestise assets to increase revenue growth, become the lowest cost service provider, apart from unlocking value in RInfratel listing Reliance Flag on Singapore Exchange.

"Our focus is to monetise all Reliance assets and increase the cash flow and profitability and to be the lowest cost operator in the industry. Going forward, we are committed to unlock value and pursue several initiatives to reduce the overall debt of the company. I expect RCom to achieve a debt-Edidta level at 3 or even lower by FY15."

Ambani also said that mobile tariffs are set to go up because of the costly spectrum prices. The value of spectrum is twice that of our current market capitalisation, he added.

Despite being the emost leveraged among Indian telecom with net debt at the end of March 2012 at around 5.5 times its operating profit (EBITDA), Ambani expects the telecom industry to consolidate with only six players operating in the Indian market against more than a dozen players currently.

"By January 2013, there will be more clarity on the sector," he said.

With inputs from Reuters

Updated Date:

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