Will try to trim RCom debt by 75 per cent in 12 months: Anil Ambani
Mumbai: Grappling with mountain of debt, Reliance Communications on September 27 said it is planning to pare the Rs 42,650-crore burden by up to 75 per cent over the next one year.
Addressing the shareholders, company Chairman Anil Ambani said, "The target is to reduce debt by 75 per cent within a year (from Rs 42,651 crore) and once the ongoing merger processes of MTS and Aircel with RCom are complete, it will help reduce debt by Rs 20,000 crore."
Describing the three-way merger as the largest ever consolidation in the domestic telecom industry, he said this will create a formidable operator with the second largest holder of spectrum aggregating 448 MHz across the 850, 900, 1,800 and 2,100 MHz bands.
It will also make RCom one of the largest and valuable corporates with an asset base of over Rs 65,000 crore and networth of Rs 35,000 crore, he said.
The merger, once completed, will make RCom the fourth largest telecom player with around 180 million subscribers. Earlier this month, RCom had signed a definitive agreement with Aircel for the merger of wireless businesses with itself.
RCom and Aircel will each hold have equal stake in the merged entity. The merger will lead to a reduction in RCom's overall debt by Rs 20,000 crore from its total debt of Rs 42,651 crore, and Aircel's debt will come down by Rs 4,000 crore from Rs 23,436 crore.
The company had however told investors and analysts that even after the merger, the new entity will have debt of Rs 35,000 crore, including Rs 7,000 crore in the form of deferred spectrum payment liabilities. This is higher than its previous statement that new entity's debt will be restricted to Rs 28,000 crore.
Ambani also said the company will shortly announce monetisation of its tower business, which has been in the making for many years now.
On RCom's association with Mukesh Ambani-led Reliance Jio, he said both the brothers are working together to realise the dream of their late father Dhirubhai Ambani, and this association has accomplished a virtual merger between RCom and Rel Jio.
He also said the company already has all the spectrum they need for 2G 3G and 4G, plus spectrum trading and sharing with Reliance Jio. This will be beefed up further once the merger is complete.
"Spectrum sharing with Rel Jio has resulted in RCom's expenditure on this coming down (substantially) while the competition will have to spend heavily on spectrum to survive," he said.
