MUMBAI: Billionaire industrialist Mukesh Ambani played the perfect Santa this Christmas season bailing out his younger brother Anil Ambani, who is in debt and out of luck. On Thursday, the senior Ambani’s Reliance Jio signed a definitive agreement to acquire the whole shebang of Reliance Communications (RCom): spectrum, mobile towers and optical fibre network, for an unknown sum.
The timing of the deal stands out not only for its economic rationale, but also for striking an emotional chord, with the announcement coming on the 85th birth anniversary of late Dhirubhai Ambani, founder of Reliance Industries.
The deal includes a cash payment and transfer of deferred spectrum instalment, but is subject to requisite approvals from the government, regulatory authorities, lenders, release of all encumbrances on assets and other conditions precedent. “The consideration is payable at completion and is subject to adjustments as specified in the agreement,” Reliance Jio said in a statement.
RCom is reeling under a debt pile of Rs 45,000 crore and the proposed deal is expected to trim debt by Rs 25,000 crore. If it comes through, it will spell the exit of Anil Ambani from the telecom sector, which he entered last decade. It has already decided to shut its 2G wireless business and merge its 4G services with its enterprise unit. But RCom will not cease to exist and will continue running other businesses comprising enterprise, GCX, data centre and 4G sharing business and will have an enterprise value of Rs 15,000 crore.
“These assets are strategic in nature and are expected to contribute significantly to the large-scale roll-out of wireless and Fiber-to-Home and Enterprise services by RJIL,” Jio said, adding that it acquired all assets without any previous liabilities attached to them.
Jio emerged as the successful bidder in the two-stage bidding process and the acquisition process is being supervised by an independent group of distinguished industry experts. “An asset monetisation process for RCOM assets was mandated by the lenders of RCOM, who appointed SBI Capital Markets Limited to run the process,” the statement said.
There was intense market speculation on the Jio-RCom deal, which saw RCom’s scrip soaring 40 per cent in a single day on Tuesday.
