RCom confirms sale of telecom assets to Reliance Jio

An RCom exhibition stall

Reliance Jio, the firm led by Mukesh Ambani, will walk away with most of the telecom assets of Reliance Communications, led by Mukesh’s brother Anil.

Rcom said it has “signed definitive binding agreements with Reliance Jio Infocomm Limited for sale of Wireless Spectrum, Tower, Fiber and Media Convergence Node (MCN) assets.”

The Anil Ambani company did not clarify if it was selling all of the spectrum, towers and fiber to Jio or only part of it.

A separate statement from Reliance Jio too confirmed the deal, though it too was vague on the exact extent of the purchases.

It said it has signed a “definitive agreement for the acquisition of specified assets of Reliance Communications Limited” under four categories.

“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,” it said.

Jio also said it is bound by “confidentiality obligations and will make further disclosures at the appropriate time.”

The deal is largely along expected lines, given that Jio depends heavily on these assets to keep its network running. Jio has a sharing agreement with RCom for fiber and spectrum and is a tenant on most of RCom’s towers. Letting a big rival like Bharti Airtel buy the assets was not seen as an option for the company.

RCom has not yet announced any similar deal with any of the other bidders such as Bharti Airtel and Vodafone, though the possibility of these companies also buying some assets cannot be ruled out.

Besides the telecom assets, RCom had also put for sale real estate assets worth Rs 10,000-14,000 cr.

The sale of telecom assets is supposed to raise about Rs 25,000 cr, while the real estate assets are supposed to generate Rs 10,000-14,000 cr.

The money has to be paid to banks, bondholders and other lenders in transactions that would see RCom reduce its debt from about Rs 45,000 cr to about Rs 6,000 cr.

It had put up 122.4 MHz of 4G spectrum, 43,000 towers and 1.78 lakh km of fiber for sale.

The spectrum are present in lucrative bands such as 800, 900, 1800 and 2100.

It has also put up 248 locations aggregating to about 5 million sq ft that are used for hosting telecom infrastructure.

The company said the process by which Reliance Jio was selected was transparent.

“RJIO 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.

Jio will primarily pay cash, but will also assume some of the liabilities and dues related to 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, RCom said.

With the sale, RCom would have got rid of nearly all of its consumer-facing telecom assets, and will focus on its carrier and enterprise business going forward.

You can read the jio statement and the rcom statement.