Billionaire Mukesh Ambani’s Reliance Jio Infocomm (RJI), a subsidiary of Reliance Industries Limited, has entered into an agreement with Anil Ambani’s debt-ridden Reliance Communications (RCom) for acquiring assets under four categories namely spectrum, tower, optical fiber network and other wireless assets.
According to RCom, the deal constitutes 122.4 MHz of 4G spectrum in the 800/900/1800/2100 MHz bands, over 43,000 towers, 1,78,000 kilometers of fiber and 248 media convergence nodes. The actual details of the transaction were not revealed but it supposedly close in phases between January and March 2018.
These assets are strategic in nature and will help in the large-scale launch of wireless and fiber to home and enterprise services by Reliance Jio Infocomm Ltd. Jio has achieved a user base of over 160 million users in just a year after it launched its 4G service.
This acquisition coincides with the 85th birth anniversary of Reliance founder Dhirubhai Ambani. Currently, Anil Ambani’s RCom is under a mammoth debt of Rs 45,000 crore. So the entire proceeds of this deal will be used by RCom to scrape its debt.
Industry giants like Goldman Sachs, Citigroup Global Markets, JM Financial Private Limited, Davis Polk & Wardwell LLP, Cyril Amarchand Mangaldas, Khaitan & Co and Ernst & Young have advised RJCL on this move.
Last month, RCom was forced to cut off its mobile voice business as it was unable to afford its operational expenses. This week, decided to leave the strategic debt restructuring (SDR) and framed a resourceful revival plan that involved zero write-offs to lenders.
Amidst the race to increase the geographical extent of their service and improve the domain of the services offered, this deal with RCom will certainly give Reliance Jio a dominance over Bharti Airtel and Vodafone. Soon, RJIL may even acquire assets from other companies.
In the past decade, the personal fortunes of the elder Ambani brother shrunk to a great extent as compared to that of Mukesh Ambani. According to Forbes Rich List, in 2007, Anil Ambani and Mukesh Ambani have a net worth of $45 billion and $49 billion respectively. Anil Ambani’s largest asset was 66% stake in Reliance Communications. However, in the Forbes 2017 rich list, Anil Ambani’s net worth shrunk to $3.5 billion whereas that of Mukesh Ambani’s was at $38 billion.