In a major relief to Reliance Communications Limited (RCom) and its lenders, the telco has announced its exit from RBI’s Strategic Debt Resolution (SDR) framework. The debt would be recast by remonetization with zero equity conversion and zero loan write-offs for lenders and bondholders.
Once all planned transactions are completed, RCom’s debt will get reduced by over 85 percent or around Rs 6000 crore. Currently, the telco has a massive debt close to Rs 45,000. It’s also one of the largest ever reduction of total debt and liabilities by any Indian company within a record time of just under 40 days.
The telco will be collecting the money by monetizing its assets which includes:
- 122.4 MHz of 4G Spectrum in the 800/900/1800/2100 MHz bands.
- Over 43,000 towers and around 1,78,000 RKM of fiber with Pan India footprint.
- 248 Media Convergence Nodes, covering over 5 Million Sqft, used for hosting telecom
- Prime real estate located in New Delhi, Chennai, Kolkata, Jigni and Tirupati.
As per the telco, both Indian and foreign companies have shown strong interest in buying its assets. Lenders have received the final binding bids and all transactions are expected to be closed in a phased manner between January and March 2018. Once the transaction is complete, RCom expects to reduce its debt by around Rs 25,000, through prepayment of loans, transfer of DoT’s deferred spectrum payment liabilities, etc.
Commercial development of the DAKC campus will also lead to a reduction of RCom’s debt by a further of Rs 10,000 crore, with the SPV holding the real estate assuming non-recourse long-term debt financing of the said amount.
RCom will continue its operation in B2B focused businesses. This includes Indian and Global Enterprise, Internet Data Centres and the largest private submarine cable network in the world. The telco will also receive equity infusion from global strategic partners for further debt reduction on continuing businesses.
With all the above monetisation of assets, equity infusion and completion of all transactions, RCom’s balance debt is expected to be reduced to around Rs 6,000 crore only. An 85 percent reduction in the telco’s total debt and liabilities.