RCom ‘debt’ plan in doubt as Aircel deal falls apart

MUMBAI: Embattled Indian telecom company Reliance Communications Ltd (RCom) faced another setback on Sunday after a deal to merge its wireless business with smaller rival Aircel was called off.

This has raised fresh doubts about its debt-repayment plans.

The firm said it had agreed with Aircel, a unit of Maxis Communications Bhd, to call off the proposed deal due to regulatory delays and legal uncertainties.

Controlled by billionaire Anil Ambani, RCom had net debt of 443.45 billion rupees (RM28.72 billion) at the end of March. The company has earned a temporary reprieve from its lenders, who have agreed to a standstill on its debt obligations as part of a planned debt restructuring.

RCom has been trying to reduce its debt by 250 billion rupees by merging its wireless business with Aircel and by selling a stake in its mobile masts arm to a unit of Canada’s Brookfield Asset Management. It had said in April the deal with Aircel would reduce debt and deferred spectrum liability by 200 billion rupees.

The collapsed deal raised further doubts about its ability to repay debt, said the head of an institutional investor in RCom.

“Will the investors have to take a hit? Will there be any kind of haircut to all the lenders in RCom? Those questions will also come,” the person added.

Maxis did not immediately respond to a request for comment.

RCom’s overseas traded bonds fell marginally in early deals yesterday, with some analysts saying bond holders were now in a better position than before as subordination risk had diminished.

RCom said it would look to monetise its spectrum through trading and sharing arrangements and continue to implement the monetisation of its tower and fibre assets. Reuters