Debt-laden Reliance Com seeking to sell its office space

Billionaire Anil Ambani's Reliance Communications has approached lenders and bond holders to defer loan repayments till at least 30 September so that it can finalize two deals in the pipeline – a merger with rival Aircel and the sale of its mobile tower business.

Anil AmbaniRCom is also seeking buyers for two prime office complexes in Delhi and Navi Mumbai as it looks to tackle mounting debts.

RCom's company chief executive for consumer business Gurdeep Singh told The Times of India the culmination of the two transactions - sale of tower assets to Canada's Brookfield (See: RCom to sell 51% in tower business to Brookfield for Rs11,000 crore) and merger of wireless business with Aircel (See:RCom, Aircel to combine mobile business into 50:50 venture) - will help RCom pare debt by around Rs25,000 crore out of a total debt of nearly Rs45,000 crore.

The company has been under financial stress for several months, and this has been worsened by the aggressive entry of brother Mukesh Ambani's Reliance Jio that is bleeding most telecom players.

On Monday, RCom reported a Rs966 crore fourth-quarter loss- its second straight quarterly loss, triggering a 21 per cent fall in its share price. The company has delayed repayment of loans to more than 10 banks (See: Reliance Communications shares tumble after Rs966 cr Q4 loss).

Singh said that as part of the plan to raise funds, the Anil Ambani Group's office complex near Connaught Place in New Delhi and the sprawling Dhirubhai Ambani Knowledge City (DAKC) in Navi Mumbai are on the block.

"Our lenders are fully aligned to what we are doing, and are supportive of the model," he told TOI. "We are in the last 120 days of consummating the two deals (Aircel and sale of towers). All necessary approvals are in place."

Singh, who also addressed analysts during the day, said that the company is in talks with lenders to seek relief.

"RCom is currently engaged in discussions with its lenders to obtain their requisite consents for the two transactions and to refinance scheduled instalments falling due in the interim period up to September 30, 2017, to facilitate expeditious closing of both transactions in the best interests of all stakeholders," he said.

Reliance Jio's aggressive plans have had a crippling effect on the telecom sector. "Clearly, this has been a totally-unexpected development and we urge all our stakeholders to appreciate the current situation and support the current transformational phase of the company, which would usher RCom into a very solid and sustainable position," Singh said.

"It's a procedural matter to take their approval," Singh said, without giving details on how many of its lenders have approved its plea to defer debt re-payment. Also, he did not answer questions on the debt servicing commitments that the company carries till the end of September. RCom has already been stretching some of its debt servicing to banks.

Singh apprised the analysts of the difficult time for the telecom industry after the launch of services by Reliance Jio and said that free cash-flows are at "highly negative" levels. "This sector's situation needs urgent requisite corrective policy initiatives by the government and regulators to infuse operational and financial health," he said.

The company, which has a spectrum sharing and trading tie-up with Jio, is counting on the two deals to pull it through the difficult times.

It is selling 51-per cent of its tower assets to Canada's Brookfield Infrastructure that it said will fetch Rs11,000 crore in cash which will be used to retire debt.

Also, its merger with Aircel will see it transfer around Rs14,000 crore of debt to the new entity. "We expect to close this deal soon with many of the regulatory approvals in place," Singh said.