New Delhi: India’s No. 2 mobile operator, Reliance Communications Ltd (RCom), said it has repaid early at least $1 billion (around Rs4,870 crore) of loans, about one-fifth of its outstanding loans, and could repay more debt ahead of schedule.
Ramesh Venkat, chief financial officer at the firm’s parent Reliance-Anil Dhirubhai Ambani Group, said on Tuesday the early repayment would save the mobile operator about Rs750 crore a year on interest costs, and expected it to have a “major positive impact” on profitability.
“It’s a little more than Rs5,000 crore. We have paid it more than three years ahead of schedule to a number of Indian and foreign banks,” Venkat said over the telephone.
“It’s all been done in the last week or 10 days,” he said, adding a “very large portion” of the interest saving would flow to the bottom line as it had been paid out of internal accruals.
RCom had debt of around Rs25,000 crore before the repayment. It has spent billions of dollars to expand its telecom networks across India.
The company, predominantly a CDMA (code-division multiple access wireless standard) operator, has spent $2 billion in taking smaller GSM (global system for mobile communications) network to all of India.
“The peak of the capex cycle is now complete with the GSM rollout... so we don’t expect any significant capex. That’s on one side, and on the other hand we are also seeing tremendous cash inflow from the operations,” Venkat said.
RCom expects to get at least Rs10,000 crore of cash from its operations during the year ended March, he said. That and current cash reserves of around Rs7,000 crore might lead to more early repayments.
“If you add all of that, really it gives us the financial flexibility to be able to repay the debt, which is why obviously we said there is some saving on interest costs, improve the balance sheet and so on.”
“There could be some more prepayment which we will do in the near future. In addition to that we will also look at refinancing opportunities, wherever we can substitute any loans, let’s say cheaper or longer-term resources,” he said.