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Anil Ambani Confident Of A Solution To Reliance Communications Debt Problem This Fiscal

Reliance Communications has a gross debt of Rs 45,733 crore.



Pedestrians walk past advertisements for Reliance Communications Ltd.’s Reliance Telecom, on a street(Photographer: Prashanth Vishwanathan/Bloomberg)
Pedestrians walk past advertisements for Reliance Communications Ltd.’s Reliance Telecom, on a street(Photographer: Prashanth Vishwanathan/Bloomberg)

Reliance Communications Ltd.’s Chairman Anil Ambani said the telecom operator has been in talks with its lenders and has their support even as they await stake sale in tower arm and merger with Aircel to go through to pare debt.

The operator is considering several options to handle its debt and expects to find a solution in the course of this financial year. “There is no magic wand for us; we don't want it nor do we deserve it,” Ambani said. Reliance Communications has a gross debt of 45,733 crore, and lenders have given it till December to repay.

On September 11, Ericsson filed an insolvency plea at the National Company Law Tribunal under the Insolvency and Bankruptcy Code to recover Rs 1,150 crore from Reliance Communications for services and equipment it had earlier supplied. Lenders have turned nervous as a pending merger with Aircel Ltd. is yet to conclude and recent developments, such as a cut in interconnect charges, could worsen the financials of the telecom firm, BloombergQuint reported earlier.

Debt Worries

In a veiled comment against elder brother Mukesh Ambani’s Reliance Jio Infocomm Ltd.’s pricing, Ambani said the telecom sector is under immense stress due to disruptions, which is a “systemic threat” both to the government’s revenue and the country’s banking sector. Banks are not willing to lend to the financially stressed telecom operators, hindering the growth of the capital-intensive sector, he said.

Reiterating that the sector’s collective debt stood at Rs 9 lakh crore, Ambani said all stakeholders including the government and lenders need to find a solution to the problem. He cautioned against what he called Indian telecom sector's shift from competition to oligopoly, duopoly or even monopoly.

The wireless sector which had 10 players earlier is now under a threat of becoming a potential monopoly. So we have to rethink strategies for the sector.
Anil Ambani, Chairman, Reliance Communications

For Reliance Communications, in particular, the threat is primarily to the wireless segment while the other businesses are relatively better off, he said.