Reliance Communications looking to raise funds via overseas debt for spectrum payment, capex

NEW DELHI: Reliance Communicationsis looking to raise funds via an overseas bond issue to pay nearly Rs 1100 crore ($173 million) to the government as upfront payment for the airwaves it bought in the recent auctions, apart from capex needs.

Fitch Ratings has assigned RCom's (BB-/Stable) proposed senior secured notes an expected rating of 'BB-(EXP), the ratings agency said in a statement on Friday.

The company needs to pay Rs 4,299.13 crore for the toptal 2G and 4G spectrum that it bought in the auctions which ended late March. Of this, it has paid around a fourth - over Rs1100 crore - as upfront payment, as per rules.

Fitch expects revenue at RCom to grow by mid-single-digit percentage in FY16 driven by improvement in average revenue per user (ARPU), increase in data services and income from assets leased to Reliance Jio Infocomm.

Operating margin is expected to improve by150-200 basis points over 31.3% in FY14, driven by improving voice tariff realisation and growing economies of scale in data segment.

The company is likely to generate at least $200 million in annual free cash flow during FY16-FY18 with capex/revenue ratio of around 15%-16%.

Reliance Communications (RCOM)