MUMBAI -- Reliance Communications Chairman Anil Ambani presented a revised debt resolution plan on Wednesday aimed at reducing the company's liabilities from 450 billion rupees ($7 billion) to 60 billion rupees by March 2018 by withdrawing the company from the consumer wireless business and unloading assets, including real estate.
The plan presented by the heavily indebted company is part of its exit from a statutory debt restructuring process its has been negotiating with lenders since June. The company's management will retain control of the company and will not provide creditor banks with ownership stakes, as promised earlier.
"We have achieved a resolution that involves exiting strategic debt recast. Clearly and truly this is a historic achievement for any group. RCom debt will fall by 250 billion rupees. The entire monetization process to repay the debt to lenders will be completed by January to March 2018," Ambani said, speaking at a news conference in Mumbai.
The company will now focus on finding buyers for the assets, which include telecom spectrum, an optical fiber network and real estate.
Ambani said the money raised from the sale will be used to pay back lenders, including China Development Bank, which requested the company be declared insolvent before India's National Company Law Tribunal in order to recover around $2 billion in debt. According to Ambani, all the company's creditors are on board with the new plan.
Reliance Communications has 4G spectrum in the 800 megahertz to 850 megahertz band, 3G service in 18 regions and a submarine fiber optic cable network stretching almost 70,000km that connects to North America, Europe, the Middle East and other parts of Asia. Its real estate assets include Dhirubhai Ambani Knowledge City near Mumbai, and a 1.6-hectare property in New Delhi.
Reliance Communications shares jumped 40% on the Bombay Stock Exchange after the announcement in the afternoon. It ended the day up nearly 31% at 21.33 rupees.
In addition to China Development Bank, public relations company Fortuna PR, equipment vendor Ericsson, Manipal Technologies and Tech Mahindra filed claims against Reliance Communications with the tribunal.
"This is monetization, not liquidation and we are running a transparent process. Bidders can bid for different frequencies in different circles," Ambani said. "Reliance Communications will have an enterprise value of 150 billion rupees."
A person in the banking industry familiar with the matter told the Nikkei Asian Review that the assets may be sold in parts or as a whole. "Binding bids will come up in one or two months for some parts of the business that require more financial due diligence, while some will be in almost immediately," the person said.
The sale of assets in the consumer mobile business will leave the telecom company focused on business to business communications, especially outside India. Reliance Communications, which until several months ago was the fifth-largest telecom company in India, lost out in competition with bigger players, especially Reliance Jio Infocomm, owned by Anil Ambani's older brother Mukesh.