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Reliance Jio to acquire Reliance Communications' wireless assets

The proceeds of the mega telecom deal will be used 100% for debt reduction, RCom said.

December 28, 2017 / 07:21 PM IST
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Reliance Communications has entered into an agreement to sell its wireless assets to Mukesh Ambani-led Reliance Jio, the Anil Ambani-led company said in a statement on Thursday. The transaction, which is subject to lenders' and other applicable approvals, will close in phased manner in January-March 2018.

While RCom stands to gain from the sale, the proceeds of which will be used for the company's debt reduction, Reliance Jio expects the assets to bolster the rollout of its wireless and FTTH services.

"Reliance Jio Infocomm Limited (RJIL) or its nominees will acquire assets under four categories – Towers, Optic Fiber Cable Network (OFC), Spectrum and Media, Convergence Nodes (MCN) from RCOM and its affiliates. These assets are strategic in nature and are expected to contribute significantly to the large scale roll-out of wireless and Fiber-to-Home and Enterprise services by RJIL," Reliance Jio said in a statement.

“Reliance Communications Ltd signs binding definitive agreements with Reliance Jio Infocomm limited for sale of valuable wireless spectrum, towers, fiber and MCNs,” Reliance Communications said in a filing to exchanges.

RCom said the deal consideration comprised of cash payment and transfer of deferred spectrum instalments payable to DoT. The proceeds of the telecom deal will be used 100% for debt reduction, the company said.

According to the deal, Reliance Jio will acquire RCom's assets such as:

—  122.4 MHz of 4G Spectrum in the 800/900/1800/2100 MHz bands
— Over 43,000 towers , amongst the top 3 independent tower holdings in India
— Approximately 1,78,000 RKM of fiber with pan India footprint
— 248 Media Convergence Nodes, covering ~5 Million sqft used for hosting telecom infrastructure

The announcement comes two days after Reliance Communications unveiled a mega restructuring programme that envisaged cutting the company's massive debt by more than 85 percent, Reliance Group Chairman Anil Ambani had said the repayment plan was not just about business.

"Morally, what is right has to be done. That’s always been our approach to business,” Ambani had said. “We have always stood by those who have supported and believed in us. Only moral financing prevails.”

On Tuesday, Ambani announced that RCom would sell telecom assets, including spectrum, towers, fibres and some real estate assets worth of Rs 25, 000 crore by the end of March 2018 to pay lenders and exit the strategic debt restructuring programme. This way RCom will achieve full resolution of its debt by cutting it to Rs 6,000 crore by monetising assets.

RCom had a debt of about Rs 45,000 crore as of FY17.

Also Read: RCom continues dream run, up nearly 90% in 3 days

Even the "mighty" house of Tatas had to "gift away" their telecom business (to Airtel), Ambani asserted, sounding bitter about the regulatory framework, saying the long time taken to clear RCom's merger with Systema Shyam Telecom represents the "unease of doing business".

"This is a crisis of the wireless telecom sector and it has engulfed many, many people and many, many companies. If it is the mighty house of the Tatas who had to gift their business, then very little has to be said about other corporate groups. The writing was on the wall," the embattled RCom chairman told reporters here announcing yet another revival plan for his nearly crippled telecom business.

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd

first published: Dec 28, 2017 06:45 pm