RCom points the finger at Reliance Jio for telecom sector’s financial woes
New Delhi: Anil Ambani-led Reliance Communications (RCom) on Tuesday blamed “freebies” offered by a new telecom operator—an apparent reference to Mukesh Ambani-run group firm Reliance Jio—for woes of the sector even as it denied having delayed any payment by more than three months.
Debt-ridden RCom said that for the first time in history, the debt of listed telecom operators has exceeded their market capitalisation. “As a result of increase in debt and decline in revenue, the debt servicing capabilities of telecom companies have been adversely impacted.
“The telecom industry’s current financial problem to some extent can be attributed to the entry of a new telecom operator and its strategy of freebies to gain customer and market share,” RCom said in a regulatory filing.
“The ‘go-slow approach by domestic banks is not only adversely impacting the corporate in making investment decision but also important refinancing programmes, which is not only creating a mismatch in cash flows of corporate but also impacting the bank’s financials due to increased provisioning,” RCom said.
The company has defaulted on some of the payments to lenders and it has received time till December for strategic restructuring plan under which it will get a seven-month standstill to service loans amounting to Rs45,000 crore.
The company shared details of debt raised along with due dates adding that “in no case, the delay has exceeded three months” and hence it was not required to sent any intimation to stock exchanges for delay in payments.
RCom said that lenders have granted it standstill period of seven months from June 2017 to service obligations related to existing debts.
RCom said that it has already announced sale of mobile towers to Brookfield Infrastructure and combination of its wireless business with Aircel group which, on completion of the deal, will reduce existing debt by up to Rs25,000 crore.
Shares of RCom closed the day at Rs20.9 a unit, down by 4.35% compared to previous close, at BSE.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.