INDIA’S RCOM POSTS LOSS IN FOURTH QUARTER
Loss and missed payments send shares plunging to record lows
MUMBAI: India’s Reliance Communications (Rcom) posted a fourth straight quarterly loss and said it failed to pay interest on some debentures, sending the debt-laden firm’s shares tumbling 14 per cent to a record low and its bonds down on Monday.
The Anil Ambani-controlled telecom operator reported a quarterly loss of 27.09 billion rupees ($414.06 million), compared with a profit of 620 million rupees a year ago. Revenue nearly halved to 26.67 billion rupees, amid a price war started by upstart rival Reliance Jio, which is backed by Anil’s elder brother Mukesh Ambani. Rcom, as the company is widely known, also said in a securities filing over the weekend that it has missed interest payments on two outstanding domestic nonconvertible debentures.
The loss and missed payments make a recovery for Rcom that much harder and come at a time when there are doubts about a previously flagged debt-restructuring plan.
Shares in the company fell as much as 14.2 per cent on Monday and were down 11.4 per cent at 0750 GMT.
With net of debt of 443 billion rupees as of end-march, Rcom is the most leveraged among listed Indian telecom companies.
After its previous plan to cut debt by selling towers to Canada’s Brookfield and merging its wireless business unit with rival Aircel fell apart, Rcom came up with a new plan last month pledging to repay a total 270 billion rupees from new deals for its towers, infrastructure assets, and real estate.
It has yet to finalise buyers for any of the assets it is planning to sell.
As part of the latest plan, the company has said banks will convert about 70 billion rupees of its debt to equity under the central bank’s strategic debt restructuring plan.
The debt-equity conversion plan may, however, run into trouble as bankers and Rcom are at loggerheads over treatment of loans which Rcom has taken from its group companies, the Economic Times newspaper reported on Sunday.
The company declined to comment on that story, but pointed to comments from its Executive Director Punit Garg, who in late October said he was confident the strategic debt restructuring plan would proceed.
As part of the deal with banks Rcom says it has won a reprieve on payments to lenders until December 2018.
Its overseas bonds also dipped on Monday, with Rcom’s 6.5 per cent bonds due 2020 indicated at 35/37 cents on the dollar. The bonds have trended sharply lower in the last six weeks as Rcom’s woes have mounted.
Reliance Communications missed a coupon payment last week, dragging offshore bondholders into a debt restructuring that has already hit the company’s onshore lenders.
Billionaire Anil Ambaniís telecom company missed a November 6 payment of $9.75 million on its 6.5 per cent $300 million bonds maturing in November 2020. Past a seven-day grace period, the issuer will be in default.
Rcom said in a press release that it would not pay bond coupons “for the time being”.