Reliance Communications jumps on promising debt reduction plan

Key Highlights: 

• RCom shares jump nearly 15% in last one week
• RCom has over Rs 44,000 crore total debt
• Lenders have given till December 2017 time to RCom for resolving its debt

Share price of Reliance Communications climbed nearly 8% after the company presented its long-term debt reduction plan to the lenders. 

An Economic Times report stated that the debt  reduction plan or Reliance Communications will bring down its debt by 60% in September and by 80% in December through sale of assets under real estate, sea cable assets and DTH (direct-to-home) business along with merger agreements from Aircel and Brookfield Infrastructure. 

At 1057 hours, share price of RCom was trading at Rs 24 per piece on BSE, up 5.49%. In last one week, RCom has seen over 14.55% rise in its stock price. 

RCom has been battling with credit ratings downgrades due the amount of  debt the company has in its balance sheet by end of March 2017. 

As on March 2017, Anil Ambani-backed RCom has over Rs 44,000 crore debt, while its free cash flow has decline to Rs 1,388.10 crore down 22.15% from Rs 1,783.1 crore of FY16. 

On June 02, 2017, Anil Ambani addressed a press conference and said that RCom has presented its debt payment plan to its lenders who approved it given the company time till December to pay the loans due. 

Ambani said that lenders will not convert debt into equity till December, 2017.

Ambani hopes that 60% of RCom's total debt can be repaid from its two deals namely Brookfield Infrastructure and Aircel.  

Sale of tower business to Brookfield will lead reduction of debt by Rs 11,000 crore and wireless business merger with Aircel will reduce debt by another Rs 14,000 crore. 

Both merger deals of RCom are in the  National Company Law Tribunal (NCLT) for approval. 

Later on June 22, 2017, Rcom came out with advertisement in newspapers to sell or lease Reliance Centre building in Delhi. It has also listed DAKC IT Park in Navi Mumbai for sale or lease. 

"We wish to inform... That the company has initiated the monetisation programme for its real estate properties," the company said in a regulatory filing yesterday. 

Huge chunk of debt has made Ambani to voluntarily draw no salary or commission from the telecom company in the current financial year.