Mukesh Ambani’s Reliance Jio
announced a deal on Thursday to acquire younger brother Anil Ambani-owned
Reliance Communications’s (RCom’s) wireless infrastructure assets, including
towers and spectrum, at an estimated price of Rs 20,000-24,000 crore. The historic
deal between the brothers came on their father Dhirubhai Ambani’s 85th birth
anniversary.
The two companies have signed
binding agreements and the proceeds would be used to pre-pay RCom’s bank loans.
“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 will utilise the proceeds of the monetisation of this cash deal solely
for pre-payment of debt to its lenders,” RCom said in a statement.
Jio, which has disrupted the Indian telecom
sector after the launch of its free voice service last September, will acquire
122.4 MHz of 4G spectrum in the 800/900/1800/2100 MHz bands, over 43,000
towers, around 178,000 route km of fibre with a pan-Indian footprint, and 248
media convergence nodes, covering 5 million sq ft used for hosting telecom
infrastructure. These assets are expected to contribute significantly to the
large scale roll-out of wireless and fibre to home and enterprise services by
Jio.
Both companies said the transactions would
close in a phased manner over the next three months ending March 2018, subject
to approvals from lenders.
Cash payments, including deferred spectrum
installments payable to Department of Telecommunication (DoT), would form part
of the deal.
RCom had defaulted on
its loans and had entered the Strategic Debt Restructuring (SDR) scheme to
recast its debt worth Rs 44,700 crore as of March. According to the deal with
the lenders, RCom was to sell its assets by December to repay the
loans.
Banks, on the other hand, had
to let go of their dues till December 2018 from the beleaguered company. But as
the company failed to sign any deal before the December 2017 deadline, the
banks will have to consider the account as a non-performing asset and set aside
15 per cent of the exposure as provisions in the December quarter.
The acquisition will put Jio
in charge of a sizeable spectrum band even as the telco has already disrupted
the sector over the past one and a half year. Jio holds almost 14 per
cent of the telecom market share by adjusted gross revenue, according to the
Telecom Regulatory Authority of India (Trai) numbers and has been steadily
rolling out freebies to telecom subscribers to grab market share.
Apart from this
transaction, RCom would also sell real estate and minority stake to
reduce its debt by 87 per cent to Rs 6,000 crore.
The company had earlier
announced plans to sell prime real estate across New Delhi, Chennai, Kolkata
and Navi Mumbai. The Jio acquisition does not include real estate assets.
SBI, IDBI Bank, Bank of
Baroda are among the top lenders to RCom. The company was also able
to convince China Development Bank, one of its large lenders, to withdraw a
National Company Law Tribunal (NCLT) petition to recover Rs 9,600-crore debt
from RCom. The RCom stock gained 7.7 per cent to close at
Rs 31 on Thursday.
For best services for traders and investors in Indian stock market for multibagger stock calls and intraday stock, nifty, stock futures, options trading calls visit our website www.meghacapital.in
For best services for traders and investors in Indian stock market for multibagger stock calls and intraday stock, nifty, stock futures, options trading calls visit our website www.meghacapital.in
