Jio to Buy Out RCom’s Wireless Assets

Mukesh Ambani-led Reliance Jio Infocomm is poised to bail out younger brother Anil Ambani’s debt-ridden telecom business by buying the wireless assets of Reliance Communications, having signed an accord that was announced on father Dhirubhai Ambani’s 85th birth anniversary.

Jio inked a definitive agreement to acquire specified assets of RCom and its affiliates in an all-cash deal on Thursday. Market and banking circles pegged the deal size at about ₹24,000 crore, but this was not confirmed by either of the companies.

RCom said it would use the proceeds of the cash deal solely for prepayment of debt. The company, weighed down by₹45,000 crore of loans and the failed merger with Aircel, had been in the midst of a strategic debt restructuring programme with the lenders.

State Bank of India is its largest local lender while China Development Bank, which had filed an insolvency petition in the bankruptcy court to recover $1.78 billion, or about ₹11,460 crore, its largest overall lender. While CDB is expected to withdraw its insolvency petition by January 5 — the next date of hearing — sources at Ericsson, which adopted a similar strategy to recover some ₹1,100 crore dues from RCom, said its case was still on though the company officially did not comment.

The deal, the contours of which were announced by Anil Ambani on December 26 as part of a new debt repayment plan, beat a deadline of December 28 by when the joint lenders forum had to take a decision on whether to convert its debt to equity and would mean RCom can now exit the SDR process and retain ownership of the company whose focus will now be on enterprise business, with the wireless operations shut down.

This agreement also came about a decade after the brothers divided the Ambani empire between with them, with the telecom interests going to the younger sibling. Thursday’s agreement marks the integration of the wireless assets of the two brothers under one roof as it had been before the split. Reliance Communications had shut its wireless business at the end of November.

The RCom assets that will change hands include 122.4 units of 4G airwaves across the 850, 900, 1800 and 2100 MHz bands, over 43,000 towers, 1,78,000 RKm (route km) of fibre with a pan-India footprint, and 248 media convergence nodes, covering 5 million sq ft used for hosting telecom infrastructure.

No comments: