Aircel Delays Debt Repayments; in Talks With Lenders for Strategic Debt Restructuring

Ailing GSM telecom service provider Aircel has delayed payment of interest on its debt repayment obligations on account of its weak liquidity position, rating agency CARE said, which also downgraded the telco to a default (D) grade. The telco has long-term bank loans of Rs. 174.79 billion or $2.7 billion, the agency said.

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Various media reports said that Aircel is talking to its lenders for a strategic debt restructuring (SDR).

“The company has delayed in repayment of interest on its debt obligations on account of its weak liquidity position as a result of its continuing weak operational performance in the hyper-competitive telecom sector…the ability of Aircel to improve its operational performance in the current industry scenario will be critical and will continue to be a key rating monitor,” CARE Ratings said in a note.

The agency further added that the severe competition in the sector post Reliance Jio Infocomm’s (Jio) entry has led to drop in Aircel’s average revenue per user (ARPU) and its operating margins have been on a downward trend, leading to deterioration in its financial risk profile.

Aircel is currently the sixth-ranked mobile carrier in the country by subscribers. Its subscriber base showed a year-on-year growth of 6% and had around 89 million users at September end.

The telecom operator’s loss in 2016 calendar year doubled to Rs. 4,319 crore, as compared to a loss of Rs. 2,215 crore in previous year.

Malaysia’s Maxis Communications Bhd owns 74% stake in Aircel, which had gotten into an agreement with Reliance Communications (RCom) to combine operations, but the deal fell apart last month due to various hurdles.

The agency said that its next set of ratings on Aircel will depend on the telco’s ability to service its debt obligations in a timely manner, finalisation of its new business plan after discussions with the lenders and any change in regulations affecting the business and the telecom industry shall be the key rating sensitivities.

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19 Comments on "Aircel Delays Debt Repayments; in Talks With Lenders for Strategic Debt Restructuring"

 

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Joy
November 17, 2017 8:58 pm 8:58 PM

AirCel should shut down & disappear.

DUANE
November 18, 2017 10:48 pm 10:48 PM

It will. Let the dust settle from Rcom.

Prithvi
November 17, 2017 8:15 pm 8:15 PM

Chidambaram should pay the debt off.

DUANE
November 18, 2017 10:49 pm 10:49 PM

Why?

Siddu
November 17, 2017 8:02 pm 8:02 PM

Aircel would be next Rcom…!!

Sudhakar
November 17, 2017 11:49 pm 11:49 PM

Jio will be the next rcom

DUANE
November 18, 2017 10:49 pm 10:49 PM

And BSNL TAMIL NADU???

Sudhakar
November 19, 2017 7:20 pm 7:20 PM

And Loottel?.

Sanjit Roy, Thakurnagar, wb
November 18, 2017 7:06 pm 7:06 PM

By then Aircel will buy jio, you know why aircel didn’t paid the debt timely because they want to divert those money to your bank accounts so that you can travel to mars to experience the Xg network of Aircel and later you can share your user experience to promote Aircel’s Xg network to india.

Siddu
November 18, 2017 8:20 pm 8:20 PM

+1 🙂

Raj
November 18, 2017 2:39 pm 2:39 PM

Sudhakar , I have doubt
Are u a paid agent?

DUANE
November 18, 2017 10:50 pm 10:50 PM

I don’t want doubt. He is.
Question is WHO would bother to pay him???

Kaushik
November 18, 2017 10:15 am 10:15 AM

That will take 12 years at least. we can enjoy till then.

Siddu
November 18, 2017 9:00 am 9:00 AM

Good joke…!! Can you pls elaborate why has Aircel failed to pay debt…!! Before you comment nonsense.. Get yourself updated reading articles fully…!!

Lalit K
November 18, 2017 9:03 pm 9:03 PM

+1

Also it is confirmed aircel will shutdown less profitable circle operate only few circle, till them find suitable owner /partner for M&A and finally leave. Some one i know works for a banking handling their debt restructuring.

DUANE
November 18, 2017 10:51 pm 10:51 PM

And AIRCEL shared their strategic plans with that SOMEONE???

Siddu
November 18, 2017 10:11 pm 10:11 PM

@Lalit bro last week a regional news channel has reported the same and initially they would scale down in 5 states…!!

Sanjit Roy, Thakurnagar, wb
November 18, 2017 10:47 pm 10:47 PM

But ultimately they will remain in 5 circles or less.

Ajay
November 18, 2017 8:06 am 8:06 AM

absolutely right.

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