RCom weighing tower deal proposals

RCom weighing tower deal proposals
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First Published: Mon, Nov 15 2010. 11 59 AM IST
Updated: Mon, Nov 15 2010. 11 59 AM IST
Mumbai: Reliance Communications said on Monday it continues to evaluate proposals for a stake sale in its tower business, but is generating enough funds to take care of its operational capital expenditure.
Beset by a bruising debt load and falling profits, India’s second-biggest mobile operator is looking for fund raising options. It has plans to sell 26% of the company and is also in talks to sell a stake in its tower unit.
An agreement to hive off the tower business to a venture with India’s GTL Infra, which would have cut its debt by more than half, fell apart in September.
“We continue to evaluate proposals. For Reliance Infratel, we continue to look at value for all stakeholders. Where value is right, we will strike a deal,” Arvind Narang, head of investor relations, said on an investor call on Monday.
“We will meet all fund requirements on the operational side from internal accruals. We are cash flow positive.”
A unit of Reliance Communications could raise at least $500 million by selling bonds to European investors, the Economic Times reported earlier on Monday.
Company officials did not comment on the report.
On Saturday, Reliance Comm reported a 40% drop in quarterly profit -- its fifth-straight quarter of profit fall -- after being squeezed by a vicious call price war in the world’s fastest-growing mobile market.
The company, controlled by billionaire Anil Ambani, said consolidated net profit fell to Rs446 crore ($100 million) for its fiscal second quarter ended September.
Indian mobile firms, including Reliance Comm and larger rival Bharti Airtel, have seen their earnings hit by a price war that broke out last year amid stiff competition in the 15-player market, sending call prices as low as 0.4 US cents a minute.
The outlook for the sector has improved in the last few months with no significant price cuts happening. Also, firms are gearing up to commercially roll out third-generation (3G) wireless services, which would help them grow high-margin mobile data business in a market that has thrived on voice calls.
Reliance Comm expects to be in the 3G market by end of the year, but officials declined to give an exact timing for the launch.
“3G should be value accretive, because we have a 3G-ready network and operational expenditure will not be high,” Syed Safawi, the company’s head of wireless business, said on the conference call.
He said for the voice segment, minutes of use in the third quarter ending December are likely to be higher than the previous sequential quarter, on account of festive demand.
At 12:13 pm, shares in Reliance Comm, valued by the market at about $8 billion, were trading 2.1% lower on the BSE. They had earlier slipped as much as 5% to touch Rs165.
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First Published: Mon, Nov 15 2010. 11 59 AM IST