Reliance Communications (RCom) has been under immense pressure due to ongoing events in the Indian telecom sector. The telecom operator led by Anil Ambani is not able to match the current low-cost tariffs scenario created by Reliance Jio in the market, followed by the India’s top three telecom operators and state-run operator BSNL.
The new development in the company is that the Chairman of Reliance Group- Anil Ambani has ‘voluntarily’ decided to draw no salary or commission from RCom in the current financial year- FY 2018“. The decision is part of company promoters’ commitment to strategic transformation program,” RCom said in an official statement today.
Furthermore, RCom management also stepped up and followed their Chairman’s lead to ensure a time-bound execution. The management team is on the board to defer the personal pay by up to 21 days.
The company further stated in the press release that “Aircel, Brookfield deals targeted to close by 30 September 2017, subject to approvals; will reduce debt by nearly 60 percent or Rs 25,000 crore. ” The new measures will remain in place until December 2017.
Earlier this month, the telco said that it has formally advised all its lenders that it will be making the repayment of an aggregate amount of Rs. 25,000 crore from the proceeds of Aircel and Brookfield transactions. “The said amount will cover not only all scheduled repayments but also include substantial prepayments to all lenders on a pro-rata basis,” said RCom at the start of this month.
RCom also said that it will close the ongoing process of merging its mobile business with Aircel and the sale of tower assets to Brookfield in the next four months. The telco reportedly said that these transactions would help it to bring down its debt substantially from Rs. 36,726 crore (as of March 31).
The telco had already stated that the combined RCom-Aircel entity would enjoy substantial benefits of scale, and CAPEX and OPEX synergies with an estimated NPV of Rs. 20,000 crore. As part of this transaction, RCom’s overall debt will reduce by Rs 14,000 crore, together with the transfer of liability for spectrum instalments of an additional approx. Rs. 6,000 crore.