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May 13, 2013, 01.09 PM IST | Source: CNBC-TV18

Hope to conclude Rel Globalcom stake sale by May-end: RCom

RCom is also betting on more network-sharing deals with Reliance Industries, controlled by Anil Ambani's older brother, Mukesh, India's richest man, which is readying a nationwide 4G network, after a pact to lease out its inter-city fibre optics network.

Moneycontrol Bureau

Gurdeep Singh, president & CEO (Wireless Business) at Reliance Communications (RCom) says one-off gains helped the country's third-biggest mobile carrier by customers offset the impact of a heavy debt load to report a smaller than expected 8.7 percent fall in quarterly profit.

"With second consecutive quarter of growth (operation-wise), RCom has now entered into a phase of accelerated growth," he told CNBC-TV18 in an interview.

The Anil Ambani-led telecom major’s revenues grew 12.3 percent quarter-on-quarter (Q-o-O), at Rs 5,956 crore. Its EBITDA stands at Rs 2,218 crore, a growth of 34.2 percent Q-o-Q and EBITDA margin at 37.2 percent, amongst the highest in the industry, says Singh.

According to Singh, GSM and data has been driving the wireless growth. "If you look at GSM and data revenue put together, it now contributes over 64 percent of the wireless revenue and this has growth over 6 percent Q-o-Q. This has been possible due to some strategy corrections we did 6-7 months ago," he says. 

RCom is betting on data growth to further consolidate its position as a leading data company. "Our mobile internet customer base has grown from USD 27.6 billion to USD 29.4 billion, a growth of 6.5 percent Q-o-Q. 3G customer base has growth 18 percent during the quarter and stands at USD 7.2 million. Our internet traffic has grown over 21 percent Q-o-Q and stands at 27,240 terrabyte," Singh informs.

Also Read: Reliance Communications to use CDMA spectrum for data

RCom's total minutes of usage in the network has grown by 2.3 percent Q-o-Q, at 105.4 billion minutes and average revenue per unit (ARPU) is up 7.5 percent from Rs 119 to Rs 128.

Meanwhile, the market has been quite interested in the talk of stake sale on Reliance Globalcom. Singh says deleveraging is one of the important priorities for the company at this moment. "We are in advanced discussion with Samena Capital along with its consortium partners for the deal. Currently, they are engaged in the process of due diligence and completion of definitive documents in relation to the acquisition," he says. 

The telecom company hopes to conclude the deal by May-end.

RCom is also betting on more network-sharing deals with Reliance Industries, controlled by Anil Ambani's older brother, Mukesh, India's richest man, which is readying a nationwide 4G network, after a pact to lease out its inter-city fibre optics network.

RCom shares, valued in total at more than USD 4 billion, have more than doubled since the beginning of April on investor hopes of more deals with Reliance Industries.

The fibre optic deal was the first business tie-up between the two brothers since they ended a feud three years ago.

"The proceeds of these transactions will be used to leverage RCom. It will also significantly improve EBITDA and free cash flows for the company and will create much more financial flexibility for RCom for the long-term," Singh says.

Reliance Communications, with net debt of USD 7.2 billion as of end-March, or more than five times its annual operating profit, is the most-leveraged among listed Indian carriers.

"RCom continues to be free cash flow positive. RCom generated operational cash flow of EBITDA of Rs 2,218 crore in the Q4. This is the second full year of positive free cash flows for the company and this trend shall continue in the succeeding years. RCom as recent as on May 10, 2013, made full repayment of its indicated ECB loan facility of USD 500 million on the due date," he says

"Going forward, the combination of the Reliance Globalcom stake sale and the fructification of the arrangement with Reliance Jio will help us bring equity and income accrual on a long-term basis, thereby helping improve company's EBITDA, cash flows and liquidity for the long-term," Singh says.

(With inputs from Reuters)

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