Indian billionaire Anil Ambani insisted Friday that debt-saddled Reliance Communications had a bright future as he moved to reassure investors who are worried that the telecoms company is close to defaulting on loans.
The 57-year-old tycoon, whose telecommunications business is being squeezed by his brother’s own mobile network venture, made a rare address to the media a day after Fitch Ratings downgraded RelComm to junk status.
Fitch said Thursday that RelComm’s debts of 440 billion rupees ($6.84 billion) meant that a loan default was a “real possibility”. It came after Moody’s also downgraded RelComm’s status this week, citing a “fragile” liquidity situation.
“We are taking steps now to reduce our debt by 60 percent. Reliance Communication’s future is bright and I assure all investors they’ll be happy with our performance,” Ambani said in Mumbai.
He told a hastily arranged press conference that RelComm would pay off 250 billion rupees of its debt to lenders by the end of September, owing to its proposed merger with Aircel and the sale of its mobile tower business.
In December RelComm announced it was selling its towers to Canadian asset management giant Brookfield for $1.6 billion while it is in the process of merging with Aircel to form a new telecoms venture called Aircom.
RelComm’s finances have been badly hit by the arrival of Reliance Jio, backed by conglomerate Reliance Industries, into India’s hugely competitive telecommunications market last year.
Jio is owned by Mukesh Ambani — India’s richest man and Anil’s older brother — and has sparked a price war since launching in September, forcing rivals to scramble around to match its deep pockets.
Some 33.1 billion rupees ($513 million) has been wiped from RelComm’s market value this year, according to Bloomberg News, with its shares down around 40 percent since the start of 2017.
“We were disappointed with the recent downgrade by rating agencies and will work and engage with them to restore our credit ratings,” Anil Ambani whose net worth is $2.7 billion according to Forbes, told reporters.
RelComm’s travails also come as India tackles a major debt problem in the country. Indian banks are saddled with some of highest levels of non-performing loans in emerging markets, according to the International Monetary Fund.
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