The worst may be over for Anil Ambani's
flagship company Reliance Communications
(RCom). Its strategy of reducing its huge debt by
leasing its infrastructure and selling some assets
has started yielding results. On Monday, the company repaid $1-billion (about
R6,000 crore) in foreign loans, bringing down its
debt burden from Rs. 37,000 crore to Rs. 31,000
crore. At one go, its annual interest burden
stands reduced from Rs. 2,700 crore to R2,200
crore. That's R500 crore that'll go straight to its bottom line. "RCom is sweating (better utilising) its assets and,
at the same time, also reducing its debt burden
(see graphic). This is very positive for the
company and will increase its valuation," said
Prashant Singhal, global markets leader, Ernst &
Young. This is reflected in its share price moving up from R57.1 on April 1 to R130.95 on Tuesday. Over the years, RCom (and other R-ADAG
companies) have been weighed down by heavy
debts that have impaired its profitability. Industry experts said Anil Ambani's deals with
elder brother Mukesh's Reliance Jio Infocomm
(RJI), first for the lease of its inter-city optic fibre
cable network and then for the multi-year lease
of 45,000 telecom towers marked the turning
point in his fortunes. "The arrangement is a key positive for RCom as
we perceive it as a right step in monetising
assets and thus deleveraging its balance sheet,"
said Sandip Agarwal, an analyst at Edelweiss
Securities. Then, Anil is negotiating to sell an 80% stake in
Reliance Globalcomm, his international undersea
cable network, to the US-based Providence Equity
Partners for R7,000 crore. His discussions with Kalanithi Maran-owned Sun
group for selling RCom's DTH business for about
R2,500 crore are also in their final stages.
flagship company Reliance Communications
(RCom). Its strategy of reducing its huge debt by
leasing its infrastructure and selling some assets
has started yielding results. On Monday, the company repaid $1-billion (about
R6,000 crore) in foreign loans, bringing down its
debt burden from Rs. 37,000 crore to Rs. 31,000
crore. At one go, its annual interest burden
stands reduced from Rs. 2,700 crore to R2,200
crore. That's R500 crore that'll go straight to its bottom line. "RCom is sweating (better utilising) its assets and,
at the same time, also reducing its debt burden
(see graphic). This is very positive for the
company and will increase its valuation," said
Prashant Singhal, global markets leader, Ernst &
Young. This is reflected in its share price moving up from R57.1 on April 1 to R130.95 on Tuesday. Over the years, RCom (and other R-ADAG
companies) have been weighed down by heavy
debts that have impaired its profitability. Industry experts said Anil Ambani's deals with
elder brother Mukesh's Reliance Jio Infocomm
(RJI), first for the lease of its inter-city optic fibre
cable network and then for the multi-year lease
of 45,000 telecom towers marked the turning
point in his fortunes. "The arrangement is a key positive for RCom as
we perceive it as a right step in monetising
assets and thus deleveraging its balance sheet,"
said Sandip Agarwal, an analyst at Edelweiss
Securities. Then, Anil is negotiating to sell an 80% stake in
Reliance Globalcomm, his international undersea
cable network, to the US-based Providence Equity
Partners for R7,000 crore. His discussions with Kalanithi Maran-owned Sun
group for selling RCom's DTH business for about
R2,500 crore are also in their final stages.
