RCom shares gain 5% on debt reduction hopes
Billionaire Anil Ambani on Tuesday reassured shareholders of his flagship telecoms carrier Reliance Communications Ltd
India's second-biggest telecoms carrier by customers, whose net debt was at $6.4 billion as of June, has so far been unsuccessful in its efforts to raise funds through asset sales.
A planned sale of its telecoms tower unit Reliance Infratel Ltd has dragged on for nearly two years. In July, Reliance Communications shelved a Singapore initial public offering of its undersea cable unit due to weak investor appetite.
"Hopefully in 2013 we will be able to conclude a value-unlocking strategy for Reliance Infratel," Ambani, India's seventh-richest man according to Forbes ranking, said at the company's annual shareholder meeting.
Reliance Communications said in May that talks on the sale of its tower arm were awaiting clarity in rules in India's troubled telecoms sector after the Supreme Court ordered to revoke permits of nearly half the operators in the 15-player market.
On Tuesday, Ambani said they would have a "fair visibility" of the number of operators in the Indian market and the potential demand for telecoms towers after an airwaves auction is completed in January next year.
The company will also again attempt to list its undersea cable arm in Singapore when market conditions improve, he said.
Reliance Communications is the most leveraged among Indian telecoms with net debt at the end of March 2012 at around 5.5 times its operating profit (EBITDA). Ambani said on Tuesday their aim was to bring it to 3 times or lower by 2014/15.
The company this year repaid holders of foreign bonds by raising a loan of $1.2 billion from a clutch of Chinese banks.
"If you ask me, the picture looks rather more gloomy not less," Tobias Bettkober, a portfolio manager with Holinger Asset Management, which held Reliance Communications convertible bonds that were redeemed in March, said last week.
"RCOM still has the same leverage. The former convert was not paid back by operating cash flow. The debt was mainly rolled over, the can was kicked forward so to speak," Zurich-based Bettkober said.
Reliance Communications shares were trading 5% higher at Rs 50.30 at 0924 GMT. The stock hit a record low of Rs 46.55 last week, and is down 28% on the year.
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