Collecting arsenals for ongoing and future tariff war, Indian telco Reliance Jio will be acquiring the wireless infrastructure assets from debt-hit telco Reliance Communications (RCom).
“Reliance Jio Infocomm Limited (RJIL), a subsidiary of Reliance Industries Limited (RIL), today announced the signing of a definitive agreement for the acquisition of specified assets of Reliance Communications Limited (RCOM) and its affiliates,” said Reliance Jio in a press statement.
Reliance Jio will essentially acquire RCom’s wireless infrastructure assets under four categories. This includes RCom’s towers, Optic Fiber Cable Network (OFC), Spectrum and Media Convergence Nodes (MCN). This will aid Jio for a large scale roll-out of wireless, Fiber to Home and Enterprise services.
The deal would include a cash payment and transfer of deferred spectrum instalments payable to Department of Telecommunications (DoT). It’s expected, the transaction to close in a phased manner by March 2018.
On the other hand, RCom will use this cash from the deal for pre-payment of debt to its lenders. Currently, the telco has a debt close to Rs 45,000. It recently, exited from RBI’s Strategic Debt Resolution (SDR) framework. With all its planned transactions, the telco aims to reduce the debt by over 85 percent or around Rs 6000 crore.
The asset monetization process for RCOM assets was mandated by the lenders, who appointed SBI Capital Markets Limited to run the process. It’s also been supervised by an independent group of distinguished industry experts. In the two-stage bidding process, RJIL emerged as the successful bidder.
Note that, the acquisition is subject to receipt of requisite approvals from Governmental and regulatory authorities, consents from all lenders, the release of all encumbrances on the said assets and other conditions precedent.