Reliance Jio Infocomm Limited, a subsidiary of Reliance Industries Ltd, controlled by Mukesh Ambani has signed a definitive agreement for the acquisition of specified assets, including spectrum, towers and other wireless infrastructure, of Anil Ambani-run Reliance Communications Ltd (RCom) and its affiliates, leading to a substantial reduction in RCom’s debt.
While neither RCom nor Reliance Jio announced the cost of acquisition of assets, RCom had on Tuesday said the monetisation of assets will lead to reduction of RCom’s debt by Rs 25,000 crore, through prepayment of loans, transfer of DoT’s deferred spectrum payment liabilities, etc.
The agreement is for the sale of wireless spectrum, tower, fiber and media convergence node (MCN) assets. The deal consideration comprises primarily of cash payment and includes transfer of deferred spectrum instalments payable to the Department of Telecommunication (DoT). The company will utilise the proceeds of the monetisation of this cash deal solely for pre-payment of debt to its lenders.
Reliance Jio will buy 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, 178,000 RKM of fiber with pan India footprint and 248 media convergence nodes, covering 5 million sq ft used for hosting telecom infrastructure.
Reliance Jio emerged as the highest bidder in a transparent process conducted under the supervision of a high-powered bid evaluation committee, comprising experts from banking, telecom and law. “The company expects the transactions to close in a phased manner between January and March 2018, subject to lenders’ and other applicable approvals,” it said.
RCom said it worked closely with all lenders and SBI Capital Markets, the advisors appointed by the lenders, to run a competitive process for the monetisation of its assets.
Meanwhile, shares of RCom continued their rally for the third straight session on Thursday, surging nearly 8 per cent following the announcement of the revival plan. The stock soared 7.72 per cent to end at Rs 30.96 on the BSE. During the day, it had shot up 18.12 per cent to Rs 33.95. In three trading sessions, the stock zoomed nearly 90 per cent, adding Rs 4,052.09 crore to its market valuation.
On December 26, RCom announced its exit from the RBI’s SDR framework, without any equity conversion or loan write-offs for lenders and bond holders. After completion of all transactions, the balance debt in RCom is expected to be Rs 6,000 crore only, representing reduction of over 85 per cent of total debt.