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RCom plans to sell stake in mobile tower arm

Was unable to raise funds through asset sales so far
Last Updated 04 September 2012, 20:37 IST

Reliance Communications (RCom) Chairman Anil Ambani, on Tuesday, vowed to bring down the high debt on the company’s books over the next three years stating the company will explore options including possible sale of a stake in its mobile tower arm next year.

Addressing shareholders at the annual general meeting, Ambani said the company will again attempt to list its undersea cable arm in Singapore when market conditions improve. 

With a  net debt of Rs 35,000 crore as of June, RCom was unsuccessful in its efforts to raise funds through asset sales so far.

A planned sale of its telecom tower unit has dragged on for nearly two years, while the company shelved a Singapore initial public offering of its undersea cable unit in July due to weak investor appetite. In May this year, RCom said talks on the sale of its tower arm were awaiting clarity in rules in the country’s troubled telecom sector.

Simply put, India’s number two mobile phone operator by customers is battling a fiercely competitive market of more than a dozen players where a sharp fall in voice call prices and high payouts for 3G airwaves have pressured margins.

Further, RCom’s debt is 10 per cent of the cumulative over Rs 3 lakh crore debt that the entire telecom sector has.

“I expect RCom to achieve a debt-Ebidta level at 3 or even lower by FY15,” Ambani said.
Ambani also spelled a four-pronged strategy to bring down the company’s debt.  Improve capital productivity to start with followed by monetising assets to increase revenue growth and enhance profitability thereby becoming the lowest cost service provider.
 
Two other strategies envisaged are to unlock the value in Reliance Infratel in 2013 and list Reliance Flag on Singapore Exchange while using the proceeds to pay debt.

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(Published 04 September 2012, 13:24 IST)

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