RCom to raise $500 million through sale of offshore bonds
RCom is in the process of finalizing investment bankers to help it raise the funds and marketing road shows are expected to start soon, multiple sources with direct knowledge of the plans told ET.
“We will be finalizing bankers to the issue within a few days,” said one of the sources. The road shows will start by the middle of this month and the aim is to launch the issue as early as possible, said the source. A spokesperson for RCom declined to comment on the matter.
Sources said the proceeds from the bond sale will be used to enhance the company’s operations and improve its offerings in a market where the entry of Mukesh Ambani’s Reliance Jio Infocomm has affected the fortunes of most operators. Larger rivals of RCom, Bharti Airtel, Vodafone and Idea Cellular, are offering competitive tariffs in an effort to match Jio’s aggressive pricing strategy.
RCom, which, is struggling with a huge debt pile, has merged with smaller rival Aircel and has plans to sell its tower infrastructure business. It has an infrastructure sharing deal with Jio.
RCom has more than Rs 44,000 crore of debt as on March 31, 2016, according to Bloomberg data. In October, it signed a non-binding deal to sell a 51 per cent stake in its telecom tower firm, Reliance Infratel, to Canadian investment manager Brookfield Asset Management for Rs 11,000 crore.
According to analysts, capex for telecom operators is expected to be higher in the next two to three years. Wireless capex, excluding on spectrum, for the top 3 telcos in fiscal 2016 was twice their capex two years earlier, Goldman Sachs analysts Manish Adukia, Piyush Mubayi and Nikhil Bhandari wrote in a note on November 7.
“While capex for the top 3 telcos is unlikely to pick up meaningfully vs FY16 levels, it would remain elevated for the next 2-3 years to support the 4G rollout,” the note said.
“Given India’s excellent macro story of low fiscal deficit and low current account deficit, long-term investors like pension funds and insurance companies would like to invest in Indian papers,” said Harihar Krishnamoorthy, treasurer at FirstRand Bank.