RCom purchase not to impact RIL ratings: Moody's

Mumbai, Dec 29 (PTI) Reliance Industries' creditrating will not be affected following the acquisition ofmobile telephony assets of Reliance Communications which willhappen at less than Rs 25,000 crore, says Moody's."RIL had cash and cash equivalents of Rs 77,000 crore,which can be used to fund the acquisition," says Vikas Halan,a vice-president and senior credit officer at the globalratings agency said today.Even assuming that RIL pays Rs 25,000 crore for theassets, Halan said "it accounts for only 0.4 per cent of RIL'spretax profit for the last one year, and 11.6 per cent of itsconsolidated borrowings as of September 2017.""Therefore, Moody's Investors Service sees no impacton RIL's ratings following the acquisition of RCom," Moody'sthat has a 'Baa2' rating on RIL with stable outlook, said.It can be noted that in November, Moody's hadwithdrawn the ratings on RCom, citing a missed scheduledpayment related to the company's dollar bondholders.The agency said it expects RIL to pay less than Rs25,000 crore for the acquisition as it is acquiring only thetowers, optic fiber cable network, spectrum and mediaconvergence nodes, and not the realty assets.Even assuming that it pays Rs 25,000 crore, Halan saidit accounts for only 0.4 per cent of RIL's pretax profit forthe last one year, and 11.6 per cent of its consolidatedborrowings as of September 2017."Despite a possible increase in RIL's consolidatedleverage the acquisition can be accommodated within RIL'srating," it added.It can be noted that during a press conference toannounce the company's exit from the strategic debtrestructuring programme that entailed bankers taking overmajority control of the company, RCom chairman Anil Ambani hadsaid it expected the asset sales, excluding the itsoperational headquarters Dhirubhai Ambani Knowledge City inthe nearby Navi Mumbai, to fetch Rs 25,000 crore.It will reduce the cushion under RIL's rating forfurther increase in its borrowings, especially if the companydoes not reduce its planned capital expenditure for itstelecom business, the agency warned.Yesterday, RIL surprised all by announcing acquisitionof the RCom assets without specifying the consideration. Ifall goes as planned, the deal will be consummated by March.Acquisition will help RIL access the telecom infrastructure assets of RCom following the latter's debt restructuring and also ensures that RCom's 4G spectrum does not fall into hands of RIL's competitors, Moody's said.

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