RCom selling part of bandwidth capacity
15-12-2009
Negotiating with bulk users to sell Indefeasible Right of Use (IRU)
Reliance Communication (RCOM) is in talks with large global players to sell a part of excess bandwidth in its global submarine cable network, reports Times of India. The deal size could be $1 billion. At present, the company is using only around 5% to 10% of the network's capacity
Reliance Communication had acquired the submarine network in 2003 when it took over global cable network player FLAG for $207 million. A source in the banking sector said the bandwidth of the fibre cable network is in the range of 2 terabytes to 8 terrabytes. But at present, the company is using only between 10 gigabytes to 80 gigabytes depending on the traffic between various sectors.
The source added that RCOM is negotiating with bulk users, who carry large data and voice traffic, to sell Indefeasible Right of Use (IRU) in the existing network. These could include Japan's KDDI and U.S. operators AT&T and Verizon. The company is learnt to have has appointed Deutsche Bank to complete the deal.
A company spokesperson, however, denied that RCOM has any plan to sell its entire submarine cable network business or US business operations. "There is no such proposal at all. The company's financial health is in good shape and in the last quarter only RCOM made the largest ever pre-payment of debt by any Indian company" he said. The company pre-paid Rs 6500 crore (Rs.65 billion) of debt using its strong cash positions.
In a recent statement, RCOM chief Anil Ambani said that with the peak of capital expenditure cycle behind the company, "we are expecting to reap the substantial benefits of these investm ents in the form of strong cash flows and superior customer experience."
"We expect our capex to decline significantly starting this year and continue on a downward trend in the future, particularly in relation to the scale of our expanding operations," Ambani had said.
The company's capital expenditure was over Rs 40,000 crore during the past two years, a substantial portion of which was used for GSM rollout. According to the latest audited figure, the company's debt-equity ratio is 0.53%.
Source: based on Times of India story
Reliance Communication (RCOM) is in talks with large global players to sell a part of excess bandwidth in its global submarine cable network, reports Times of India. The deal size could be $1 billion. At present, the company is using only around 5% to 10% of the network's capacity
Reliance Communication had acquired the submarine network in 2003 when it took over global cable network player FLAG for $207 million. A source in the banking sector said the bandwidth of the fibre cable network is in the range of 2 terabytes to 8 terrabytes. But at present, the company is using only between 10 gigabytes to 80 gigabytes depending on the traffic between various sectors.
The source added that RCOM is negotiating with bulk users, who carry large data and voice traffic, to sell Indefeasible Right of Use (IRU) in the existing network. These could include Japan's KDDI and U.S. operators AT&T and Verizon. The company is learnt to have has appointed Deutsche Bank to complete the deal.
A company spokesperson, however, denied that RCOM has any plan to sell its entire submarine cable network business or US business operations. "There is no such proposal at all. The company's financial health is in good shape and in the last quarter only RCOM made the largest ever pre-payment of debt by any Indian company" he said. The company pre-paid Rs 6500 crore (Rs.65 billion) of debt using its strong cash positions.
In a recent statement, RCOM chief Anil Ambani said that with the peak of capital expenditure cycle behind the company, "we are expecting to reap the substantial benefits of these investm ents in the form of strong cash flows and superior customer experience."
"We expect our capex to decline significantly starting this year and continue on a downward trend in the future, particularly in relation to the scale of our expanding operations," Ambani had said.
The company's capital expenditure was over Rs 40,000 crore during the past two years, a substantial portion of which was used for GSM rollout. According to the latest audited figure, the company's debt-equity ratio is 0.53%.
Source: based on Times of India story
