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R-Com pill to dump debt

Mumbai, Sept. 28: Anil Ambani is planning to make Reliance Communications (R-Com) debt free in three years and he told shareholders how he was going to achieve that daunting objective.

The younger Ambani scion intends to offload a 26 per cent stake in the Rs 27,276-crore giant and also list its telecom tower subsidiary Reliance Infratel.

He clearly isn’t fazed by the collapse earlier this month of his agreement with GTL Infrastructure to hive off the telecom tower business in what was touted as a Rs 55,000-crore deal. GTL had signed a non-binding agreement in June to merge Reliance Infratel with itself. It backed off earlier this month after the two sides failed to agree on the valuation of the business.

R-Com currently has total debts of Rs 29,715 crore on its books.

“In Reliance Infratel, we are in discussions with strategic and financial investors to unlock value by creating a truly independent and operator-neutral tower company. The transaction structure of such a deal will comprise a combination of cash and stock, which will substantially bring down our debt,” Ambani told shareholders.

He added that R-Com also had the option of combining such a transaction with a possible initial public offering for Reliance Infratel for which the necessary approval from Sebi has already been received.

R-Com is scouting for a strategic investor who will pick up a 26 per cent stake.

“There is substantial interest in such an offering as we are now the only telecom operator in the country without a foreign partner. A combination of these strategic and financial initiatives would result in a large cash infusion into your company and would significantly bring down debt levels in the next few quarters. Indeed, they could potentially make us debt free in three years or so,” he said.

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