Asset sale woes, RJio delay lower RCom credit score: Moody's

Stalled asset sale deals and delay in launch of Reliance Jio services led to downgrade of credit outlook of telecom operator Reliance Communications from stable to negative, Moody's Investor Service said today.
The credit rating firm expects Reliance Jio (RJio) service to be launched in the second half of this year as against its target of starting service in first half.
"Growth in data revenues, particularly 4G services, will drive much of the improvement in RCom's operating metrics. But RCom has to wait until RJio commercially launches its 4G services before RCom can start to offer its own 4G services to new customers on the network and spectrum that it shares with RJio," Moody's said.

RCom has plans to upgrade all its CDMA customers to 4G platform and it will primarily leverage RJio's network to offer the services.
"We expect RJio's 4G commercial launch to be delayed to the second half of 2016 at the earliest, versus its earlier target of early 2016," Moody's said.
Credit outlook reflects ability of a company to pay back its debt.

"As of December 2015, RCom had Rs 427 billion of reported debt, of which Rs 31 billion matured in January-March 2016 and Rs 109 billion is maturing in fiscal 2017. Near-term refinancing risk is particularly high in the quarter ending June 2016, with RCom having Rs 26 billion of bank debt maturing," Moody's said.

RCom has been making attempts to sell its various assets, including DTH, submarine cables and mobile tower business, but has not able to finalise any of the deal.
The company in December said it has been able to sell 150 residential flats in Navi Mumbai for Rs 330 crore.
The rating firm believes that RCom is currently not pursuing the sale of GCX (Global Cloud Xchange) and DTH businesses as its deleveraging strategy now hinges on tower disposal and the merger of the wireless businesses.
The company signed an exclusive agreement with Tillman and TPG for the sale of its tower assets.

The report referred to the delay in deal between Aircel and RCom for which exclusive discussions started in December for a potential merger of their mobile business, but the same has been extended for another 60 days.