Rcom and Aircel to merge as Aircom
05 June 2017
Reliance Communications Ltd (Rcom), which a day ago announced a lenders-backed strategic loan restructuring plan (See: RCom gets 7-month's time to service Rs45,000-cr debt). has now revealed that the new Rcom-Aircel merged entity will be called Aircom once the deal is completed.
The company also said its lenders have given it a 7-month reprieve from servicing its 45,000-crore debt.
"Lenders take note of advanced stage of implementation of strategic transactions of Wireless and Towers business for debt reduction of Rs25,000 crore, or 60 per cent."
"RCom to also present plan for sustainable long term servicing of remaining debt of Rs20,000 crore," it added.
Reliance will hold a 50-per cent stake in the combined entity.
The new firm will be the third-largest operator in the country in terms of customer market share and revenue market share with a subscriber base of 186 million.
Following this, RCom's overall debt will fall by Rs14,000 crore, together with the transfer of liability for spectrum instalments of an additional Rs6,000 crore.
Reliance is also looking at selling a strategic stake in its Global Cloud Exchange (GCX), an RCom subsidiary.
Reliance Communications has reported a net loss of Rs1,285 crore for the year, compared to a net profit of Rs660 crore in the previous year due to free offers, disruptive prices and hyper competition in the telecom industry.
"For the first time in over 20 years, the telecom sector registered de-growth in revenues, leading to a reduction in the Government's share in revenues, sharp drop in operating margins, accompanied by increased interest costs arising from a staggering industry debt burden, and higher depreciation and amortisation charges as a result of higher spectrum purchase costs," the company said.
"Steep declines in profitability and/or net losses have been reported for the past two-quarters by all telecom operators in the country without exception, and a couple of operators have shut down their entire operations in the country," it added.
The telco's consolidated revenues stood at Rs4,524 crore in the fourth quarter, down 8.1 per cent. EBITDA stood at Rs1,083 crore, down 10.2 per cent, compared to the trailing quarter, in line with industry trends, and led by the impact of free offers, disruptive pricing and unprecedented competitive intensity in the industry, the company said.