Anil Ambani presents new strategy to save Reliance Communications

Anil Ambani of Reliance CommunicationsReliance Communications promoter Anil Ambani has offered to sell or divest a part of the group assets to reduce major portion of the debt of the Indian telecom operator.

The strategy announced by Anil Ambani, who’s the brother of Mukesh Ambani, is aimed at reducing the debt of Reliance Communications by Rs 25,000 crore to Rs 6,000 crore, representing reduction of over 85 percent of the total debt.

The corporate strategy will enable Reliance Communications to exit from the SDR framework of the Reserve Bank of India, with zero equity conversion and zero loan write-offs for financial lenders and bond holders.

Recently, Reliance Communications announced its decision to stop 2G and 3G services and focus on 4G business. Some telecom operators believe that 4G will become backbone of all Indian telecom operators in phases.

Anil Ambani, chairman of Reliance Communications, said: “What we have achieved, in the face of extraordinary challenges, is truly historic and unprecedented in Indian corporate history.”

Reliance Communications assets

# 122.4 MHz of 4G Spectrum in the 800/900/1800/2100 MHz bands
# Over 43,000 cell towers
# 178,000 RKM of fiber
# 248 Media Convergence Nodes, covering ~5 million Sq ft, used for hosting telecom infrastructure
# Real estate in New Delhi, Chennai, Kolkata, Jigni and Tirupati

An independent Bid Evaluation Committee, comprising of eminent experts from banking, telecom and law, will conduct the monetization process. SBI Capital Markets is the advisors appointed by the financial lenders to run a competitive process in a transparent manner to monetize its assets.

Financial lenders have received the final binding bids and all transactions are expected to be closed in a phased manner between January and March 2018. The monetisation of these assets alone will lead to reduction of RCOM’s debt by ~ Rs. 25,000 crore, through prepayment of loans, transfer of DoT’s deferred spectrum payment liabilities, etc.

The promoters are looking for co-developers for RCOM’s Dhirubhai Ambani Knowledge City campus that comprises of over 125 acres of real estate in New Bombay. The complex — already registered as an IT park – will be developed under the “Integrated Information Technology Township” Scheme of Maharashtra over the next 10 years. The value of the project will be over Rs 25,000 crore.

The development of the DAKC campus will lead to reduction of RCOM’s debt by a further ~ Rs 10,000 crore.

Merchant banker Credit Suisse is assisting RCOM to identity equity investors for its profitable B2B focused businesses, including Indian and Global Enterprise, Internet Data Centres and the largest private submarine cable network in the world.

The strategy indicates that the group does not have any enquiries for tower business or the wireless operations of Reliance Communiations. Earlier, Reliance Communications was eager to sell wireless business and towers.

The crisist at Reliance Communications started when Mukesh Ambani-promoted Reliance Jio offered free voice and data services to all Indians to attract the first 100 million users for its 4G network.

Bharti Airtel seems to have escaped from cut throat competition in the Indian wireless market. Idea Cellular and Vodafone clubbing their telecom operations to survive in the market. Aircel is closing down some business. Airtel is acquiring Tata Teleservices (mobile business) and Telenor India.

Baburajan K