At a recent shareholders meeting, Anil Ambani, Chairman, Anil Dhirubhai Ambani Group unveiled plans to cut debt, expand capacity and issue bonus shares in Reliance Capital, the group?s finance arm.
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All three companies, Reliance Power, Reliance Communications and Reliance Capital, have been adversely affected by the past year?s slowdown, which dragged down revenue and undermined profitability. Reliance Power and Reliance Communications in particular faced a difficult time due to the power producer?s gas dispute with Reliance Industries and the telecom company?s high debt burden.
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Ambani has stated that RCOM is trying to become debt-free in two or three years, as a result of a stake sale, sale of tower assets, lower capital expenditure and rising free cash flow. He also said that the company has spent Rs 350 billion over the past three years, and plans an expense of Rs 30 billion this financial year ending March 2011 as well.
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?In Reliance Infratel, we are in discussions with strategic and financial investors to unlock value by creating a truly independent and operator-neutral tower company. The transaction structure of such a deal will comprise a combination of cash and stock which will substantially bring down our debt,? he elaborated at the recent share holder meeting.
