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Telecommunications major Reliance Communications (RCom) will raise Rs 13,000 crore (Rs 130 billion) debt in the next three months to meet certain capex requirements and scheduled debt repayment obligations.
The debt is part of the total Rs 24,000 crore (Rs 240 billion) capex earmarked from January 2009 to March 2010 (over 15 months) and Rs 15,000 crore (Rs 150 billion) as capex for the financial year 2010. The company is expected to announce the fund-raising in the coming weeks, according to sources close to the development.
Of the total Rs 13,000 crore (Rs 130 billion), the company had proposed to raise Rs 10,000 crore (Rs 100 billion) through a long-term fund-based facility and the remaining Rs 3,000 crore (Rs 30 billion) through a non-convertible debenture issue.
The firm is raising the debt to meet the capex requirements of various projects, including expansion of GSM network, and repayment of debts. The capex for the next financial year (Rs 150 billion) also includes expansion plans of its telecom infrastructure subsidiary, Reliance Infratel. RCom is said to be in an advanced stage of discussions with foreign investors for divesting an additional stake in Reliance Infratel. RCom officials declined to comment.
Meanwhile, the credit rating agency ICRA has assigned a long-term rating of LAAA -- its highest-credit-quality rating -- to RCom's proposed long-term fund-based facility and non-convertible debenture issues. The agency has also reaffirmed the LAAA rating to the Rs 20,156 crore (Rs 201.56 billion) long-term fund based/ non-fund based limits. The rating means that the instruments carry the lowest credit risk, ICRA said in a release in Mumbai on Wednesday.
The credit rating agency has also re-affirmed short-term ratings of A1+ to RCom's Rs 7,408 crore (Rs 74.08 billion) short-term fund-based/non-fund based limits and Rs 2,000 crore (Rs 20 billion) commercial paper. A1 is ICRA's highest for short-term debt instruments.
ICRA also stated that there was a significant rise in Rcom's debt levels: from Rs 17,440 crore (Rs 174.4 billion) as on March 31, 2007, to Rs 25,820 crore (Rs 258.2 billion) as on March 31, 2008 and further to Rs 26,670 crore (Rs 266.7 billion) as on December 31, 2008. It also said a significant part of the debt is in foreign currency.
The ratings have factored in RCom's established position as a leading service provider with its presence spanning wireless and wire-line services, enterprise connectivity solutions, domestic and international long distance segments (voice and data services), and DTH pay TV services, ICRA said.