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Mukesh Ambani to assist Anil Ambani by buying telecom assets of RCOM

Mukesh Ambani and familyMukesh Ambani, India’s richest person, will assist his younger brother Anil Ambani by buying certain telecom assets of Reliance Communications.

The debt-ridden Reliance Communications has been looking for a suitor to bail out the company and pay off debt to its financial lenders and bond holders.

Reliance Jio Infocomm will be buying wireless spectrum, cell towers, fiber and media convergence node from the ailing Reliance Communications.

Reliance Communications did not reveal the size of the deal. Reliance Communications is promoted by Anil Ambani. Anil Ambani’s brother Mukesh Ambani is the promoter of Reliance Jio, India’s #1 4G operator.

Before the split of the family business under the RIL brand, both Mukesh Ambani and Anil Ambani, sons of Dhirubhai Ambani, were instrumental in starting and managing Reliance Communications.

Reliance Jio shines

Tanu Sharma, associate director, Corporates at India Ratings, said Reliance Jio garnered 13.9 percent Revenue Market Share September quarter of 2017.

Vodafone India has AGR (adjusted gross revenue) of 20.5 percent, and Idea has 17.3 percent which on a combined basis is slightly ahead of the combined AGR of Bharti Airtel with 28.8 percent, Tata Teleservices with 5.4 percent and Telenor India with 1.7 percent.

Reliance Jio added 5.9 million subscribers, Bharti Airtel and BSNL each added 1 million subscribers whereas the rest of the players reported subscriber losses in September 2017.

The below statistics how Reliance Jio performed in the India wireless market as compared with Reliance Communications in the last 12 months.
Reliance Communications subscriber base Q3Reliance Communications, which had 2G and 3G operations, started looking for survival following the entry of Reliance Jio in Sept. 2016. Reliance Jio’s free data and voice offers for almost one year forced several telecom operators to post drop in revenue and profit.

Reliance Communications earlier said the commercial development of the DAKC campus will lead to reduction of RCOM’s debt by Rs 10,000 crore.

The below statistics shows that Reliance Communications lost its 5 million subscribers in September at a time when Reliance Jio added 6 million wireless subscribers.
Reliance Jio subscriber base Q3 2017

The deal

122.4 MHz of 4G spectrum in the 800/900/1800/2100 MHz bands
Over 43,000 telecom towers
1,78,000 RKM of fiber
248 Media Convergence Nodes, covering ~5 Million sqft used for hosting telecom infrastructure

The company expects the transactions to close in a phased manner between January and March 2018, subject to lenders’ and other applicable approvals.

The consideration comprises primarily of cash payment and includes transfer of deferred spectrum installments payable to the Department of Telecommunication (DoT).

The company will utilize the proceeds of the monetization of this cash deal solely for pre-payment of debt to its lenders.

Earlier, Reliance Communications said it will be receiving funds from the development of real estate assets and diluting stake in B2B telecom business.

Earlier, the discussion between Reliance Communications and Maxis-promoted Aircel for a merger did not take off due to several factors.

Baburajan K

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