The telecom arm of the Anil Ambani-owned Reliance Group is facing an existential crisis.
The last week of May was full of unprecedented developments for Reliance Communications, the seventh largest telecom service provider in the country, starting with its first-ever yearly loss of ₹1,283 crore. The losses, coupled with high debt – ₹ 45,733.40 crore as on March 2017 – prompted banks to raise a red flag on the company. To make matters worse, ratings agencies ICRA, CARE and Moody’s downgraded RCom over debt concerns. The panic-stricken investors reacted; in seven trading days, RCom’s stock tanked 33 per cent.
Compelled to allay fears about the telco’s future, RCom Chairman Anil Ambani called the media at Reliance Centre in Santacruz, the new global headquarters of the Reliance Group where he shifted from the upscale Ballard Estate about a year ago. He fielded a volley of questions at the 95-minute-long Q&A, before settling down for an informal chat. The lenders had granted a seven-month “standstill” on the debt, he said.
Between now and December, Ambani will have to conclude two crucial deals – merger of the wireless business with Aircel and the 51 per cent stake sale in Reliance Infratel (tower business) to Canadian private investment firm Brookfield Infrastructure – that are expected to bring in around ₹25,000 crore. With this, it will be able to pare down its debt to about ₹20,000 crore.
This story is from the July 02, 2017 edition of Business Today.
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This story is from the July 02, 2017 edition of Business Today.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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