RCom looks to cut debt by 75 per cent with Aircel, tower deal

New Delhi: Telecom operator Reliance Communications on May 31 said it expects to cut down its debt by 75 per cent through merger of MTS, Aircel and sales of mobile towers.

"Integration of MTS business with RCom is on track. We expect to complete the integration in August. We expect to make announcement with respect to Aircel merger anytime in June. Once we complete the Aircel transaction, we will go for the tower deal," RCom CEO for Consumer Business Gurdeep Singh said today during a conference call.

"With completion of these deals, we expect RCom's debt to reduce by 75 per cent."

RCom's net debt at the end of March 2016 stood at Rs 41,362.1 crore. RCom and Aircel have extended discussion period for the possible merger of the two till June 22. Singh said discussions are in advanced stages.

RCom and Aircel talks, if successful, would lead to a combined entity holding 19.3 per cent of the total spectrum allocated to the industry -- the highest by an entity. The new entity, which is in the works, would hold spectrum across all allocated bands -- 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz -- for 2G, 3G and 4G services.

RCom also expects approval from the government for spectrum liberalisation in four circles -- Kerala, Karnataka, Tamil Nadu and Rajasthan -- by tomorrow. The company has paid over Rs 1,200 crore for liberalising spectrum in these circles. DoT has already approved liberalisation of RCom's CDMA spectrum in 17 out of 22 telecom circles.

The company is using liberalised CDMA spectrum to offer 4G service to its customers. RCom is migrating all its CDMA customers to the 4G network in phases and those who want to opt out will be disconnected.

"The current licence requires us to give 30-day notice to customers if we are closing a service. We gave the notice to them in first week of April. Those who do not want to move, they will be switched off today.

By June, most of them will be switched off," RCom President Punit Garg said. RCom consolidated net profit in the last quarter of ended March 31, 2016 declined by about 22 per cent at Rs 177 crore from Rs 228 crore a year ago.