Jio’s optical fibre and telecom tower assets valued at $15 billion?

Canadian private equity firm Brookfield Asset Management is in talks with India’s Reliance Jio to buy a stake in its optical fibre and telecom tower assets, The Times of India reported on Friday.
Ericsson LTE network supplierReliance Industries (RIL), the parent company of Reliance Jio, said in December it planned to separate its fibre and tower business from its telecom arm Reliance Jio Infocomm.

“The end objective of that is to find a different set of investors who would be wanting to run these kind of assets,” V Srikanth, joint chief financial officer of Reliance Industries said in January at the company’s quarterly results announcement.

Reliance aims to unlock value in the assets and reduce debt. Reliance Jio reported revenue of Rs 10,383 crore (+51 percent) with a net profit of Rs 831 crore during the third quarter of fiscal 2018-19. Reliance Jio has 280 million mobile subscribers on its all-India 4G network in the country.

Reliance Jio never revealed the number of towers, or the reach and length of the fibre optic infrastructure in India. The company had said earlier it wanted to cover 99 percent of India’s population by the end of December 2019 with its telecom service.

The value of the assets is expected to be around $15 billion, the newspaper said, without citing its sources.

Jio, which has absorbed $40 billion of Reliance’s capital expenditure (Capex) in the last five years, has around $25 billion of debt and has been instrumental in turning India’s most valuable energy company into a position of net debt.

Analysts at foreign broking firm CLSA have said that since a big chunk of Jio’s capex has been put towards building its tower and fibre infrastructure, a potential sale of the assets could reduce the telecom firm’s debt substantially.