12 years on, Mukesh gets back RCom in pieces

Two companies did not disclose the deal size banking sources pegged the transaction value at Rs 24,000 25,000 crore

Anil Ambani's struggling telecom operations received a bail-out from elder brother Mukesh's Reliance Jio as the siblings announced a wide-ranging, but expected, deal for spectrum, towers and optic fibre assets on their father's birthday.

Anil's Reliance Communications (R-Com) said it had signed "definitive binding agreements" with Mukesh's Reliance Jio Infocomm Ltd (RJio) for the sale of wireless spectrum, tower, fibre and media convergence node (MCN) assets. It was told that these assets are strategic in nature that will help Jio to expand its wireless, fiber to home and enterprise services.

The transaction, subject to approval from lenders and other authorities, is expected to be completed in a phased manner between January and March 2018. "Timing could be questionable: I mean, Jio does not need spectrum right now - they have enough for at least the next two years - but they must be thinking long term".

"An asset monetisation process for RCom assets was mandated by the lenders of RCom, who appointed SBI Capital Markets to run the process", the Jio release said. "The company will utilise the proceeds of the monetisation of this cash deal exclusively for pre-payment of debt to its lenders", RCom said.

The company will reduce debt by monetizing its wireless business and selling land parcels at Dhirubhai Ambani Knowledge City (DAKC), Chairman Anil Ambani said in a press conference. Reliance Communications is promoted by Anil Ambani. As of June, Reliance Jio ranked fourth in overall market share (10.2% against Bharti Airtel Ltd's 23.5%), but it led in internet subscribers (28.6% versus Airtel's 21.9%). The company's recent struggles to stay afloat are in sharp contrast to its heyday in 2010, when it was India's second largest mobile operator.

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Last year, Mukesh Ambani entered the telecom sector again with the launch of Jio and immediately created turmoil by offering free voice calls and cut-throat data tariffs.

Shares of RCom have almost doubled since Tuesday and tripled in the past eight sessions.

It will also form a special goal vehicle for its real estate assets under which it will develop 20 million square feet space on 125 acre over 10 years.

Reliance Jio Infocomm Ltd (RJIL), the telecommunications arm of Reliance.

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