RCom to exit from SDR framework, to reduce debt by Rs 25,000 crore by March 2018: Anil Ambani

ET Bureau,  December 27, 2017

Reliance Communications will sell telecom assets, including spectrum, towers and fibre,
worth Rs 25,000 crore by March 2018 to pre-pay lenders and exit the ongoing strategic
debt restructuring (SDR) programme, chairman Anil Ambani said.
The company in its new avatar as an enterprise-focussed business will sell stake to global
investors to pare loans further, he added.

Addressing a press conference on Tuesday, Ambani said the company had on Monday
evening reached an out-of-court settlement with China Development Bank (CDB) which
had filed an insolvency petition in the bankruptcy court to recover $1.78 billion, or about
Rs 11,460 crore, from the telecom company.

The company plans to monetise its real estate assets to generate an additional Rs 10,000
crore, and divest stake worth Rs 4,000 crore in the residual RCom — which consists of
the global undersea cable business, data centres and enterprise business, after having
shut the wireless business — to overseas private equity investors.

After the entire process is completed, the company's debt would shrink to Rs 6,000 crore
from Rs 45,000 crore, said Ambani. RCom's shares rose nearly 31% to close at Rs 21.33
on the Bombay Stock Exchange on Tuesday. The company, weighed down by Rs 45,000 crore of debt and a failed merger with Aircel, has been in the midst of an SDR programme.

Thirty-five lenders led by State Bank of India had to decide by December 28 if they would convert debt to equity. The telco was also dragged to the insolvency court by CDB and creditors such as Ericsson over non-payment of dues.

"We have had an understanding and an arrangement with all the lenders to ensure a substantial prepayment, the residual debt to be duly addressed and a viable business model for the new RCom with no risk to the banks of conversion, write-offs, etc. They (lenders) can't have a better solution," Ambani said.

Blaming the hypercompetition in the telecom sector for its financial troubles which even forced the "mighty house of the Tatas to gift their business", Ambani said the essence of the agreements with the lenders was to make sure they did not need to write off debt or convert debt into equity and be saddled with assets they would find difficult to sell.
He said the company had received binding bids from 15 companies for assets, including spectrum, towers, fibre and mobile switching nodes, and that the process would be finalised in stages between January and March. 

Ambani didn't name any potential buyers. ET had earlier reported that Reliance Jio, owned by Anil Ambani's elder brother Mukesh, is believed to have put in bids worth Rs 18,000 crore for assets including spectrum, towers, optic fibre and network operating centre. Bharti Airtel has also said it has submitted bids for some spectrum and equipment. 

Bankers confirmed they have received bids for telecom assets from the likes of Jio, and also for real estate. The value of these bids would be known in the next few days.

Though the company claimed banks won't be hit, banking sources said the December quarter may turn out to be a bad one since they have to classify RCom as an NPA and provide for it as the transaction moves along. 

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