Anil Ambani, chairman of Reliance Communications.
Anil Ambani, chairman of Reliance Communications.

Beleaguered telecom company Reliance Communications, which owes Rs 450 billion (US$ 6.94 billion) to various lenders, has asked them to convert a part of their debt to equity for 51% control of the stressed company under a “zero write-off” plan.

The company, owned by Anil Ambani, the younger brother of India’s richest man Mukesh Ambani, has come up with this plan after its attempt to merge with another troubled telco Aircel fell apart. It plans to shut its 2G business by November and focus on 4G.

“Lenders will convert Rs 71 billion (US$ 1.1 billion) worth of debt into equity (under the strategic debt restructuring plan of the Reserve Bank of India). Post debt monetization through sale of real estate assets, the company would have only Rs 60 billion (US$ 930 million) of debt left,”  Puneet Garg, executive director and chief financial officer, told Business Standard.

The company said the zero write-off plan for its lenders would help it to repay over Rs 270 billion (US$ 4.17 billion). Repayment would be by raising Rs 170 billion (US$ 2.62 billion) through asset monetization of spectrum, towers, fibre network, and media convergence nodes. Another Rs 100 billion (US$ 1.54 billion) would be raised and repaid through sale of real estate assets across eight metro cities. The company is working with SBI Capital Markets Ltd (appointed by lenders) on the same.

Reliance Communications holds 122.4 GHz worth of spectrum across 800, 900, 1800 and 2100 MHz bands.