Reliance Communications Says It’s Looking To Refinance Loans

Reliance Communications Ltd. said the company is looking to refinance its debt even as the telecom operator’s shares fell the most since listing on worries about its ability to repay loans.

The company is in talks with lenders to refinance scheduled instalments falling due in the interim period up to September 30, Gurdeep Singh, chief executive officer of the company’s wireless division, said in a conference call post earnings.

Shares declined 20.4 percent on the first day of trading after the Anil Ambani-run telecom company reported its largest ever loss since listing at Rs 966 crore in the three months ended March. Revenue fell 24 percent to Rs 4,312 crore year-on-year as the company’s average revenue per user declined to its lowest level of Rs 141.

The company has sought time from lenders to repay some of its dollar- and rupee-denominated debt, Bloomberg reported citing people familiar with the matter. The Economic Times reported on Monday quoting bankers that the company had missed loan obligations.

Reliance Communications’ finance costs rose 24 percent to Rs 983 crore in the fourth quarter compared to the corresponding period last year. The company’s interest coverage ratio declined to 1.1 times, the lowest in the last six years. The interest coverage ratio shows the ability of a company to pay interest on outstanding debt.

The management said that it expects to complete merger with Aircel and sale of tower business to Brookfield Infrastructure by September. Reliance Communications had a net debt of Rs 44,345 crore as of March, and the company said the two deals will reduce it by Rs 25,000 crore.

The company said it will consider monetising its real estate assets in Delhi and Navi Mumbai. It will first look to sell the property in Delhi followed by the sale of Dhirubhai Ambani Knowledge City, which could take at least two years, the management said.

Reliance Communications has declined 40 percent year-to-date compared to a 15 percent gain in the S&P BSE Telecom Index. Of the 17 analysts tracking the company, 13 have a ‘sell’ rating on its stock.