Indian telecoms company Reliance Communications (RCom) unveiled a plan to reduce its debt burden by selling off assets and to re-position itself as a niche operator targeting business customers sending its shares soaring to a three-month high.
RCom will also receive investments from private equity companies, helping further reduce debt, Ambani added, without providing details. Reliance Jio has emerged as the highest bidder for 3-4 of the five asset packages of Reliance Communications.
Earlier, as part of the debt-restructuring plan, lenders had agreed to convert part of their debt (Rs 7,000 crore) to equity to gain a majority control (51 per cent) in the company.
RCom had net debt of 450 billion rupees at the end of October, according to a slide presented on Tuesday, putting it among India's most indebted companies.
After the failure of its debt-reducing plans like sale of the tower unit and a merger with its immediate rival Aircel, RCom was forced to exit the flagship consumer facing business in this November and also charted a future course which will limit its offerings to the enterprise segment going forward.
With mounting losses arising from a long-drawn price war in the telecom sector, the latest involving brother Mukesh Ambani's Reliance Jio Infocomm, and an unresolved debt restructuring plan, RCom had to partially shut down its telecom services. Upon completion of all transactions as announced, the balance debt in RCom is expected to be approximately Rs 6000 crore only, representing reduction of over 85% of total debt.
It is not clear if the RIL arm will also bid for at least some of R-Com's tower assets as Mukesh's telecom company has resolutely stuck to an asset-light strategy in order to tamp down on costs.
"The writing was on the wall", the embattled RCom chairman told reporters here announcing yet another revival plan for his almost crippled telecom business. Anil Ambani said the company had received multiple bids.
Bharti Airtel seems to have escaped from cut throat competition in the Indian wireless market.
The assets that are up for sale include 122.4 MHz of 4G spectrum in the 800/900/1800/2100 MHz bands, over 43,000 towers across the country, 1,78,000 route KM of optic fibre network and 248 media convergence nodes that offer a coverage of 5 million sq ft. Combined with the proceeds of around Rs 10,000 cr from the sale of his real estate assets, he would generate enough money to pay off most of his debt.
The promoters are looking for co-developers for RCOM's Dhirubhai Ambani Knowledge City campus that comprises of over 125 acres of real estate in New Bombay. The value of the project will be over Rs 25,000 crore.
The complex which is held by a Special Purpose Vehicle (SPV) - is already registered as an IT park, and is proposed to be commercially developed under the "Integrated Information Technology Township" Scheme of the Government of Maharashtra over the next 10 years, he added.