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Reliance Communications Ltd. :Too Few Steps Forward

Reliance Communications (RCOM IN) has been granted a relief by the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) on 1-October-2018 as the tribunal has rejected Bank Guarantee demands made by the Department of Telecommunications (DoT). RCOM has also managed to sell off multiple large-scale assets in order to repay debt, including a INR30bn sale of fibre and infra assets to Reliance Jio Infocomm Limited (JIO). The sales have primarily been made to Reliance Jio Infocomm Limited (JIO), owned by RCOM’s Chairman (Anil Ambani)’s brother, Mukesh. RCOM launched a tender and exchange offer to the shareholders of its USD300m bonds (RCOMIN 6.5% 6Nov2020s) on 6-August-2018.

This offer was approved by the bondholders on 24-August-2018, and they will receive cash proceeds up to USD118m along with USD55m in new bonds to be issued by RCOM subsidiary GCX. About 83% of bondholders accepted the offer since, in our view, they are unlikely to get a better deal in the future amidst ongoing uncertainty in planned asset sales.

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