RCom rejigs debt to exit SDR with zero write-off


Reliance Group Chairman Anil Ambani on Tuesday said the company has achieved full resolution of Reliance Communications' (RCOM) debt, reducing it by Rs 25,000 crore to Rs 6,000 crore by monetising assets.

Addressing the media on the restructuring plan, Mr Ambani said RCom's exit from the consumer mobile business was a effect of fierce competition in the sector, which has been rocked by last year's arrival of Reliance Jio, controlled by Mr Ambani's elder brother Mukesh Ambani.

The Reliance Group Chairman said it would monetise the assets of its wireless business. All the transactions are expected to be concluded in a phased manner between January and March 2018.

Mumbai: Reliance Communications Ltd (RCom) on Tuesday announced yet another debt revival plan on Tuesday claiming full debt resolution by March but without involving any conversion of debt into equity and exiting the strategic debt restructuring (SDR) framework, apart from coming on-board of a strategic investor. RCOM debt will reduce by Rs 25,000 crore. The company has a total debt of over Rs 44,000 crore.

"RCom is going to be transformed to a b2b business", he said,"90% of the revenue (of the new entity) is from annuities".

Following Tuesday's developments, RCom's shares went up by 30.78% to close at Rs 21.33 on BSE.

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Rising competition in India's telecom sector, including the entry of start-up Jio - backed by Anil Ambani's brother Mukesh - has trimmed margins in India's telecom sector to wafer-thin levels.

As per the new debt-resolution plan, an eight-stage monetisation process was approved by an oversight committee headed by former RBI deputy governor S S Mundra and members from Trai.

The debt resolution also involves a part transfer of spectrum installments, Ambani said.

The restructuring deal comes a month after RCom was hit by an insolvency petition from China Development Bank, its largest single creditor. This will result in RCom exiting the wireless telecom business and paring its debt to Rs 6,000 crore from Rs 45,000 crore. As per the SDR plan agreed in June, lenders were to convert at least Rs 7,000 crore in debt into equity.

RCom will also form an SPV for its real estate assets under which it will develop 20 million square feet space across 125 acre over 10 years. Under the new scheme, the sharing agreement will be used to round out the enterprise offering, rather than to offer 4G services to individual customers. "It has engulfed many people and many companies", said Ambani. Even in this business, the company plans to rope in a strategic investor at an enterprise value of Rs 15,000 crore, he said, adding that non-binding bids have been received from 'global strategics'.

Even the "mighty" house of Tatas had to "gift away" their telecom business (to Airtel), Ambani asserted, sounding bitter about the regulatory framework, saying the long time taken to clear RCom's merger with Systema Shyam Telecom represents the "unease of doing business".

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