RELIANCE COMMUNICATION ( Reliance Communication Website)
The company is 58% owned by the Reliance Group's subsidiaries.
Special Features : None
Rating : Ba3 (Moody’s)/BB- (Fitch)
Yield guidance : 6.5%
Profile of Reliance Communication ( RCOMIN )
· RCOMIN is Indian telco that provides mobile services, broadband,
and undersea cable business.
· 4th largest integrated mobile operator in India
· 80% of revenue from India, 20% outside of India.
· RCOMIN is 58% owned by Reliance Group related companies.
India wireless Industry
· 2nd largest wireless market after China.
· High growth rate over the last 5 year ( compounded annual growth rate of 21% )
· Relatively low penetration rate of 71% ( versus China at 89% ).
Bonds are secured by:
· Plant and machinery including tower assets and optic fiber cables.
· Telecom licenses.
· Pledge over shares of its interest in unlisted RCIL and RTL.
Strength and weakness according to the prospectus and rating company:
Indian wireless market is a high growth market.
Fall in oil price is positive for Indian telcos, which spend close to 4.5% of their mobile
revenues on diesel in order to keep their base stations running in the face of acute power scarcity.
Management has commited to deleverage in the next 2 years.
They are in the process of looking to sell GCX.
· Uncertain regulatory environment.
· Forex risk due to substantial amount of USD debt.
· Higher leverage than peers such as Bharti Airtel and Idea Cellular.
Comparables : Indian High Yield BondsGCX LTD ( Global Cloud Exchange ) 7% 8/1/2019
B2 ,YTW=6.24% (callable on 8/1/16@105) ,email@example.com
GCX currently operates five subsea cable networks. Currently wholly owned by Reliance Communications,
but is in talks to sell 50% to a strategic investor ( possibly Citic Telecom )Delhi Airport 6.125% 2/3/2022
Ba1, BB YTW=5.11% firstname.lastname@example.org
Delhi Airport is the largest and busiest airport in India.
Ownership : GMR 54%, Airport Authority India 26%, Malaysia Airport 10%, Fraport 10%.
Comments from Bondsupermart 2/15/16Indian offshore bond market
1. One of the highest-yielding India offshore bonds
2. Strong shareholders
3. Resilient business