Reliance Communications Management has guided for capex investment of Rs15-20bn for FY15 following a capex-light model. They indicated that they will be receiving any additionally required fibre and tower assets from Reliance Jio through the reciprocal arrangement and will only invest in electronics.
The company has realigned its low-usage cell sites to achieve base station level profitability. This will have a temporary effect on the subscribers in those geographies; however, the company intends to use ICR (intra-circle roaming) arrangements to provide services in those areas. Management attributed the decline in the revenues of global operations to seasonality effects and expects it to ramp up as new IRU (indefeasible rights of use) contracts sold in this quarter will be booked in the following quarters.
The company launched the One India One Rate (free national roaming offer) plan this quarter to attract more customers in the high-value corporate and SME roaming segments. Similarly, it started offering 3G data services at the rate of 2G to appeal to upgraders (from 2G to 3G). RCom continues to target market share in the data upgraders (2G to 3G upgraders) market through aggressive data pricing.
Management stated that the company will continue to further de-leverage its balance sheet through securitization of tower receivables, disposal of non-core assets and monetization of real estates. Management expects to reduce the net debt to Rs250bn in the coming 12 months through these efforts.