Reliance Communications shares took yet another beating on the stock exchanges on Wednesday, may 31, with the stock trading 8.23 percent lower at Rs 18.40 on the BSE at around 2 pm. The scrip has lost 28 percent in the past five days ever since lenders raised the issue of loan repayment and rating agencies downgrading its debt to "default".
The company's debt stood at about Rs 45,000 crore as of March 31, 2017.
The sell-off and the consequent fall accelerated after credit rating agencies — CARE, ICRA and Moody's — downgraded its debt programme, citing the company's financials. "The reasons for these revisions include RCOM's weak operating performance, high leverage, the weak internal cash flow generation against sizeable debt servicing obligations and delays in debt servicing by the company," Reliance Communications said in a regulatory filing to the BSE on Tuesday, May 30.
The free fall in the company's share price continued despite a statement to repay debt within four months.
"Post signing of binding documents for the Aircel and Brookfield transactions, RCOM has formally advised all its lenders that it will be making repayment of an aggregate amount of Rs 25,000 crore from the proceeds of these two transactions, on or before September 30, 2017. The said amount will cover not only all scheduled repayments, but also include substantial pre-payments to all lenders on a pro-rata basis," Reliance Communications said in a regulatory filing.
For the fourth quarter (Q4) ended March 2017, Reliance Communications posted net loss of Rs 966 crore as against a profit of Rs 90 crore in the corresponding period last year.
Income fell sharply to Rs 4,524 crore for Q4 from Rs 5980 crore for the year-ago period.
"For the first time in over 20 years, the telecom sector registered de-growth in revenues, leading to a reduction in the Government's share in revenues, sharp drop in operating margins, accompanied by increased interest costs arising from a staggering industry debt burden, and higher depreciation and amortisation charges as a result of higher spectrum purchase costs," the company said in a statement.
