Kuala Lumpur: Tycoon T. Ananda Krishnancontrolled Binariang GSM Sdn Bhd is set to decouple Indian telco unit Aircel Cellular Ltd from the group under a restructuring exercise, according to a local rating agency. RAM Ratings Services Bhd (RAM) said the decoupling is expected to be concluded by the third quarter of 2012. "The management of Binariang has intimated that it will embark on a restructuring exercise to decouple Aircel from the group, which is expected to be concluded in the next nine months," RAM said late last week. Binariang has ringgit-denominated debts of RM21 billion and US dollar-denominated debt papers of US$900 million (RM2.86 billion). Industry observers said Binariang needed to inject more money into Aircel but its huge debts mean it would be difficult to borrow unless the debt setback is addressed first. Aircel is India's fith largest cellular company with some 55 million subscribers. It had budgeted US$1.4 billion (RM4.45 billion) for its nationwide coverage expansion in June last year. Aircel reportedly planned to double its India investment to US$10 billion (RM31.8 billion) over the next four years to roll out new services and expand existing network to include wireless broadband coverage nationwide. RAM said if the restructuring exercise was not completed within the suggested timeframe, its ratings of Binariang's multi-billion ringgit sukuk will have to be reassessed. RAM Ratings has reaffirmed the "AA3/P1" and "A2" ratings of Binariang's senior sukuk and junior sukuk respectively. The outlook on the sukuk's long-term rating has been revised from stable to negative. The senior sukuk consists of Binariang's RM19 billion Islamic medium-term notes programme and RM2 billion Islamic commercial papers programme, while the junior sukuk refers to the group's US$900 million cumulative non-convertible Islamic junior sukuk. "The negative outlook reflects a decline in the group's financial profile over the last few years where Aircel, the group's 74 per cent unit, has made hefty investments to support network rollout as well as third generation and broadband wireless access spectrum acquisition costs in India," RAM Ratings said. The rating agency also said these investments had resulted in an increase in debt levels at Aircel and were not expected to generate strong earnings in the near term. "This has in turn weighed heavily on the group's consolidated balance sheet and debt protection indicators," it added. Looking ahead, RAM said the steady profit performance and cash-generating aptitude of Binariang's Malaysian operations are expected to anchor the group's cash-generating ability.
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