DNA Money Edit: RCom stares at long winding road

Reliance Communications's (RCom) decision to call off the merger with Aircel Ltd is likely to push the telecom major into a bigger debt trap if its fresh plans to sell real estate assets and optimise spectrum are not immediately fructified. The proposed merger of its wireless business with Aircel and a separate deal to sell telecom tower assets were part of the company's grand plan to pare its Rs 45,000 crore debt by more than half.

After the debt-ridden company presented a restructuring plan involving the two proposals, its lenders had allowed RCom to postpone debt-servicing payments till December. Post the completion of merger RCom was expecting to transfer debt of around Rs 14,000 crore to the merged entity. Talks are underway to sell 51% stake in its mobile tower arm, and RCom expects to rake in Rs 11,000 crore.

The company's deleveraging process is facing a certain delay even as its plan to sell a stake in the tower company remains intact. RCom now claims to look at alternative ways to reduce its debt, including sale of real estate assets and optimisation of spectrum. With real estate prices remaining subdued and most telcos holding adequate spectrum, it may be a long winding road for RCom ahead.