NEW DELHI: In a large scale corporate restructure, Mukesh Ambani-led Reliance Industries Ltd (RIL) has decided to put all its digital eggs in one basket, forming a wholly owned subsidiary (WOS), which will operate all of its emerging digital businesses, including its new telecom arm Reliance Jio Infocomm Ltd (RJIL). RIL will infuse a whopping Rs 1,08,000 crore into the new consolidated digital unit, said a company release. “The WOS will also acquire RIL’s equity investment of Rs 65,000 crore in RJIL,” it said.
According to the group, this restructuring will effectively make Reliance Jio a net debt free company. This would make the unit a compelling value proposition for investors, especially if RIL decides to take the telecom firm public, said analysts.
"Like global technology peers, the digital platform company with negligible leverage makes a compelling investment proposition for both strategic and financial investors, many of whom have evinced strong interest in partnering with us," the RIL said. It had already turned Reliance Jio into a very asset light business earlier in March, when it had demerged tower and fiber passive infrastructure assets of about Rs 1,25,000 crore to Infrastructure Investment Trusts (InvITs). "Post this demerger, RJIL has become asset-light having a balance sheet size of Rs 2,37,000 crore," it said.
Company chairman Ambani also highlighted the new units attractiveness to investors. “Given the reach and scale of our digital ecosystem, we have received strong interest from potential strategic partners. We will induct the right partners in our Platform Company, creating and unlocking meaningful value for RIL shareholders,” he said.
According to the company, the move essentially ensures that monetisation opportunities accrue to shareholders efficiently. "There is no impact in the value pre and post reorganization for any shareholder; there is no impact on the consolidated debt of RIL," it said.
Reliance Jio to be net debt free company
This restructuring will effectively make Reliance Jio a net debt free company, according to the group. This would make the unit a compelling value proposition for investors, especially if RIL decides to take the telecom firm public, according to analysts