Reliance Communications Ltd Management Discussions.

Forward-looking statements

Statements in this Management Discussion and Analysis of Financial Conditions and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of the future events.

The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forward-looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statements. Important factors that could influence the Companys operations include interconnect usage charges, determination of tariff and such other charges and levies by the regulatory authority, changes in government regulations, tax laws, economic developments within the country and such other factors globally.

The financial statements are prepared under historical cost convention, on accrual basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the Act) and comply with the Accounting Standards notified under Section 133 of the Act. The management of Reliance Communications Limited has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements reflect, in a true and fair manner, the state of affairs for the year.

The following discussions on our financial conditions and results of operations should be read together with our audited consolidated financial statements and the notes to these statements included in the Annual Report.

Unless otherwise specified or the context otherwise requires, all references herein to "we", "us", "our", "the Company", "Reliance", "RCOM", "RCOM Group" or "Reliance Communications" are to Reliance Communications Limited and its subsidiary companies, joint ventures and associate companies.

The Company is undergoing the corporate insolvency resolution process in terms of the provisions of the Insolvency and Bankruptcy Code, 2016 ("Code"). In terms of the said process, a resolution plan in relation to RCOM has been approved by the committee of creditors ("COC") of RCOM, as per the provisions of the Code. An application in relation to the resolution plan as approved by the COC of RCOM has been filed at the Honble National Company Law Tribunal, Mumbai Bench ("NCLT"), in terms of Section 31 of the Code, and the said application is presently pending approval of the Honble NCLT. Upon the approval of the resolution plan by the NCLT, the business operations of RCOM shall be carried out as per the terms contained in the said resolution plan.

Further, as mentioned above as the Company is in Corporate Insolvency Resolution Process ("CIR Process") hence outlook, opportunity and threats, developments, risk and concerns and ratios has not been provided separately as required under Listing Regulations.

Indian Telecom Industry

India continues to be the one of the largest telecommunications market in the world, with around 989 Million subscribers. FY 2019-20 saw the consolidation of the Indian mobile telecommunications market into three private players, besides the two PSUs. India has transformed from multi-player hyper competitive market to an Oligopoly and possibly moving towards a duopoly. The industry players balance sheet is stretched with unsustainable debt, continued hyper price competition and upcoming demands for high capex on account of 5G and fiber expansion.

The consolidation has also led to the coming of specialist B2B strengths into sharp focus. Now that Reliance Communications is a pure play B2B operator, the Company is able to better utilize its resources towards focused delivery of its services to the enterprise segment.

Industry statistics

• Total number of telephone subscribers (Wireless and Wireline) in India is 1 1 77.97 million at the end of March 2020, against 1,183 million at the end of March 2019.

• Wireless subscribers accounted for 98.3% of the overall telecom subscriber base.

• Wireless tele-density declined to 85.87% in March 2020, compared to 90.11% at the end of March 2019.

• The Internet subscriber base showed growth and at the end of March 2020, the total as at 687.44 million, against 544 million in March 2019. Wireless Internet continued to remain the preferred medium of access and accounted for nearly 97% of the subscriber base.

Company Overview

Business Areas

Reliance Communications Limited (RCOM), together with its subsidiary Globalcom IDC Limited (GIDC), is a telecommunication service provider with businesses including India Data Center Business (IDC) and India National Long Distance (NLD) business.

RCOM currently serves several Indian corporations, including, regional and domestic carriers. RCOM conducts a substantial portion of its business through subsidiary companies, including Globalcom IDC Limited and Reliance Infratel Limited (RITL).

India Operations

India Enterprise services

In India, RCOM provides wireline telecom services to the business and government segments. These include a comprehensive portfolio spanning Network Connectivity, Cloud Networking, Data Center Services, Enterprise Voice, Cloud Telephony, Access Number Services, Collaboration Services, Wholesale Voice & Value Added Service (VAS). The Company currently serves several businesses of all sizes-from multinational conglomerates to SMEs-belonging to almost every vertical: BFSI, Manufacturing, Logistics, Healthcare, IT & ITeS, OTT and New Media, to name just a few.

With nine world-class data centers spread across key business markets in India (Mumbai, Bengaluru, Chennai & Hyderabad), we are now a leading provider of data center services in the region to hundreds of enterprise customers, including many of Indias marquee brands in the BFSI, FMCG, new media and e-commerce industry segments. These services cover Colocation, Shared IT Infrastructure and IT Managed Services.

Reliance Infratel Limited (Telecom Infrastructure Business)

RITL, a subsidiary of RCOM, is in the business of building, owning and operating telecommunication towers, optic fiber cable assets and related assets at designated sites, and to provide these passive telecommunication infrastructure assets on a shared basis to wireless service providers and other communications service providers under long-term contracts. These customers use the space on our telecommunications towers to install their active communication-related equipment to operate their wireless communications networks. Customers can also use our optic fiber network to connect the sites to the core network and for connectivity between telecom Circles.

Global Operations

Overview

RCOM provide Wholesale Voice services to Mobile Network Operators (MNOs), Fixed Network Operators (FNOs), Tier 1 Carriers, Calling Card Companies and Over-the-Top (OTT) players across the world. Using our global Next-Generation Network (NGN), multiple international Voice PoPs, and established relationships with Carriers across the globe, we help carry Voice to almost every possible destination on the planet.

Business Strategy

a. Network Infrastructure Enhancement

We will continue to enhance our network infrastructure and data center footprint across India in order to master the combination of Cloud Orchestration, Fiber Ubiquity Doing so will establish our strategic building blocks as we continue to move towards becoming the technology infrastructure company of the next decade. Our infrastructure plan will focus on three key areas:

Data Center Centric Networks- We will build low- cost, distributed, focused compute and diverse compute centers at strategic locations across key markets, with initial deployment in India.

High-Speed Trunking between Data Centers - We will build scalable 100 Gig+ super-highways between every CBD based on the Forward Operating Center concept. In addition, we will establish ownership economics with glass-through capabilities across land and sea.

Commoditized Low-Cost Last Mile Access-We will further Branch Connect and low-cost UBRs and open FOCs to allow access to multiple last-mile providers. We will access carrier interconnect centers in every major market seamlessly.

b. Continue to Focus on Enhancing Products and Services Portfolio

We aim to continue to grow our revenue streams through the expansion of our portfolio of service offerings and specific sales and marketing initiatives aimed at increasing our Enterprise customer base across India and globally. Such efforts include focus on new products and enhancements of our solutions portfolio, including VPN, Next-Generation Enterprise Networking, Branch Connect, IP Centrex, SIP Trunk, and SIP Toll-Free Service.

c. Focus on Reduction of Operating Costs

In line with our growth, we also focus on cost management and margin expansion through various measures to reduce our operating costs and achieve cost optimization. We have entered into sharing agreements also to lower our regulatory cash outflows as well as future capex expansion needs.

Financial Performance - Overview

The Companys standalone financial performance is disclosed under the head Financial Performance in the Directors Report. The consolidated performance of the Company is given below:

Revenues and operating expenses

On a consolidated basis, in the continuing operations, the Company earned total revenues of Rs 1,734 crore (US $229 million). The net loss after tax recorded by the Company was Rs 10,807 crore (US $1,428 million). Total operating expenditure stood at Rs 1,901 crore (US $ 251 million).

Operating profit of the continuing operations before finance charges, depreciation and amortisation, exceptional items and provision against fixed assets (EBITDA)

The Company earned EBITDA of (-) 167 crore (US $(-) 22 million). The EBITDA margin for the year was (-) 9.63 per cent.

Depreciation and amortization

The Depreciation and Amortization charges were Rs 354 crore (US $ 47 million).

Loss before / after tax

The Loss before exceptional item was Rs 583 crore (US $ 77 million). Exceptional Item (Loss) Rs (-)10,214 crore (US $ 1,350 million), Tax was to the tune of Rs 14 crore (US $ 2 million). The Loss after tax was Rs 10,807 crore (US $ 1428 million).

Balance Sheet

As on March 31, 2020, the Company had total assets of Rs 48,000 crore (US $ 6,345 million). Stakeholders equity was negative (-) Rs 48,156 crore (US $ 6,365 million), while net debt (i.e. net of excluding cash and cash equivalents) was Rs 45,060 crore (US $ 5,956 million), giving a net debt to equity ratio of (0.94) times.

Segment-wise Review

1. India Operations

Overview

RCOMs India Operations segment comprises the following businesses-voice, long-distance services and broadband access to enterprise customers; and managed Internet data centre services. Additionally, our company Reliance Tech Services Limited (RTS) is a complete end-to-end IT and Technology solutions provider to RCOM Business units through delivery and operational excellence.

Revenues and Profit

The revenues for the financial year ended March 31, 2020 were Rs 1,075 crore (US $ 142 million). The EBITDA during the same period was (loss) (-) Rs 285 crore (US $ 38 million), while the EBIT (Earnings before Interest and Tax) was (loss) (-) Rs 477 crore (US $63 million).

2. Global Operations Overview

The Global Business Unit offers the International longdistance voice, our business segments Carrier Business units. We provide carrier voice Services,.

Revenues and Profit

The Revenues for the financial year ended March 31, 2020 in this segment were Rs 726 crore (US $96 million). While the EBITDA was (loss) (-) 118 crore (US$ (-)16 million), the EBIT was loss (-) Rs 44 crore (US $(-) 6 million).

Strategic Business Units

1. Reliance Communications Infrastructure Limited (RCIL)

RCIL, a wholly-owned subsidiary of the Company, offers Other marketing services.

Revenues and Operating Expenses

RCIL earned total revenues of Rs 13 crore (US $ 2 million) during the year, compared to Rs 444 crore (US $ 64 million) for the previous year. RCIL incurred total operating expenses of Rs 18 crore (US $ 2 million), compared to Rs 262 crore (US $ 38 million) in the previous year.

Net Profit / (Loss)

The net loss after tax recorded by RCIL was Rs 11 crore (US $ 1 million), compared to loss of Rs 2,093 crore (US $303 million) in the previous year.

Balance Sheet

As on March 31, 2020, RCIL had total assets (net) of Rs 3,952 crore (US $522 million) and shareholders fund negative amounting to Rs 2,278 crore (US $301 million).

2. Reliance Telecom Limited (RTL)

RTL, a wholly-owned subsidiary of the Company, holding telecom license in Madhya Pradesh, West Bengal, Himachal Pradesh, Odisha, Bihar, Assam, Kolkata and North East service areas.

Pursuant to an application filed by Ericsson India Pvt. Ltd before the Honble National Company Law Tribunal, Mumbai Bench ("NCLT") in terms of Section 9 of the Insolvency and Bankruptcy Code, 2016 read with the rules and regulations framed thereunder ("Code"), the NCLT had admitted the application and ordered the commencement of corporate insolvency resolution process ("CIR process" or "CIRP") of RTL vide its order dated May 15, 2018 ("Admission Order"). The Honble NCLT had, pursuant to the Admission Order, appointed an interim resolution professional for RTL ("IRP") vide its order dated May 18, 2018. In terms of the Admission Order, inter alia, the management of the affairs of RTL was vested in the IRP.

Subsequently, the Honble National Company Law Appellate Tribunal ("NCLAT"), while adjudicating upon an appeal preferred against the admission of the insolvency application against RTL, vide its order dated May 30, 2018, inter alia, stayed the Admission Order and allowed the management of RTL to function ("Stay Order"). On April 30, 2019, the NCLAT, upon allowing the withdrawal of the aforesaid appeal, vacated all interim orders including the Stay Order. Upon vacation of the Stay Order, the CIR Process of RTL re-commenced.

Thereafter, the committee of creditors of RTL resolved with the requisite voting share, to replace the IRP with Mr. Anish Niranjan Nanavaty, as the resolution professional for RTL ("RP" or "Resolution Professional"). Subsequently, the Honble NCLT has appointed Mr. Anish Niranjan Nanavaty as the RP for RTL vide its order dated June 21, 2019, which was published on June 28, 2019. Accordingly, the management of RTL vests in the RP during the continuance of the CIR process of RTL.

In accordance with the provisions of the Code, various resolution plans in respect of RTL were received by the RP. The committee of creditors of RTL ("COC"), in their meeting held on March 02, 2020, has approved the resolution plan submitted by UV Asset Reconstruction Company Limited ("Resolution Plan") which was subsequently submitted to the Honble NCLT on March 6, 2020 in accordance with Section 30(6) of the Code. The same is sub-judice with the Honble NCLT.

Revenues and Operating Expenses

RTL earned total revenues of Rs Nil (US $ Nil) during the year, compared to Rs 23 crore (US $3 million) in the previous year. RTL incurred total operating expenses of Rs 31 crore (US $4 million), compared to Rs 80 crore (US $12 million) in the previous year.

Net Profit / (Loss)

The net loss after tax recorded by RTL was Rs 3,304 crore (US $437 million), compared to net loss of Rs 334 crore (US $48 million) in the previous year.

Balance Sheet

As on March 31, 2020, RTL had total assets of Rs 3,840 crore (US $508 million) and shareholders fund negative amounting to Rs 10,084 crore (US $1,333 million).

3. Reliance Infratel Limited (RITL)

RITL, subsidiary of the Company, is in the business of telecom Infrastructure.

Pursuant to an application filed by Ericsson India Pvt. Ltd before the Honble National Company Law Tribunal, Mumbai Bench ("NCLT") in terms of Section 9 of the Insolvency and Bankruptcy Code, 2016 read with the rules and regulations framed thereunder ("Code"), the NCLT had admitted the application and ordered the commencement of corporate insolvency resolution process ("CIR process" or "CIRP") of RITL vide its order dated May 15, 2018 ("Admission Order"). The Honble NCLT had, pursuant to the Admission Order, appointed an interim resolution professional for RITL ("IRP") vide its order dated May 18, 2018. In terms of the Admission Order, inter alia, the management of the affairs of RITL was vested in the IRP. Subsequently, the Honble National Company Law Appellate Tribunal ("NCLAT"), while adjudicating upon an appeal preferred against the admission of the insolvency application against the Company, vide its order dated May 30, 2018, inter alia, stayed the Admission Order and allowed the management of the Company to function ("Stay Order"). On April 30, 2019, the NCLAT, upon allowing the withdrawal of the aforesaid appeal, vacated all interim orders including the Stay Order. Upon vacation of the Stay Order, the CIR Process of RITL re-commenced. Thereafter, the committee of creditors of RITL resolved with the requisite voting share, to replace the IRP with Mr. Anish Niranjan Nanavaty, as the resolution professional for RITL ("RP" or "Resolution Professional"). Subsequently, the Honble NCLT has appointed Mr. Anish Niranjan Nanavaty as the RP for RITL vide its order dated June 21, 2019, which was published on June 28, 2019. Accordingly, the management of RITL vests in the RP during the continuance of the CIR process of RITL.

In accordance with the provisions of the Code, various resolution plans in respect of RITL were received by the RP. The committee of creditors of RITL ("COC"), in their meeting held on March 02, 2020, has approved the resolution plan submitted by Infrastructure Projects, a division of Reliance Digital Platform & Project Service Limited, which was subsequently submitted to the Honble NCLT on March 6, 2020 in accordance with Section 30(6) of the Code. The same is sub-judice with the Honble NCLT.

Revenues and Operating Expenses RITL earned total revenues of Rs 1,343 crore (US $178 million) during the year, compared to Rs 1,450 crore (US $210 million) in the previous year. The Company incurred total operating expenses of Rs 1 522 crore (US $201 million), compared to Rs 1,574 crore (US $228 million) in the previous year.

Net Profit / (Loss)

The net loss after tax recorded by RITL was Rs 66 crore (US $9 million), compared to loss of Rs 132 crore (US $19 million) in the previous year.

Balance Sheet

As on March 31, 2020, RITL had total assets of Rs 12,887 crore (US $1,703 million). Shareholders fund was Rs 1,155 crore (US $153 million).

Adequacy of Internal Control and Systems

The Company has internal controls aimed at achieving efficiency in operations, optimum utilization of resources, effective monitoring and compliance with all applicable laws. The Management Audit Team undertakes extensive checks, process reviews and also conducts internal audits. The Audit Committee of the Board reviews major findings in the internal audit reports as well as the adequacy of internal controls.

Risk Management Framework

The Company has instituted a Risk Management framework based on identification of potential risk areas, evaluation of risk intensity, and clear-cut risk mitigation policies, plans and procedures both at the enterprise and operating levels. The framework seeks to facilitate a common organizational understanding of the exposure to various risks and uncertainties at an early stage, followed by timely and effective mitigation. The Audit Committee of the Board reviews the risk management framework at periodic intervals.

Corporate Governance

The Companys Code of Conduct policy which has set out the systems, process and policies conforming to international standards are reviewed periodically to ensure their continuing relevance, effectiveness and responsiveness to the needs of investors both local and global and all other stakeholders. We maintained the highest standards of corporate governance principles and best practices.

Human Resource and Employees Relations In the area of HR and Talent Management, the prime focus for the company has been on development of people and process efficiencies.

Under people efficiency improvements, teams across various functions underwent in-house tailor-made trainings anchored by functional SPOCs, and team managers underwent trainings on managing performance through effective feedback process. As part of creating process efficiencies in this field, several process (both online and offline) were analyzed and revamped to make these more effective and impactful. Team structures and roles were closely analyzed and aligned in order to create efficiencies within teams. In addition, changes were made in some key policies to make these more effective and efficient.

Corporate Social Responsibility

At RCom, CSR is inculcated well within the culture of the Company and continuous efforts were taken to strengthen its social initiatives each year to make the programs more sustainable and support the community at large.