ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter
Economy

Reliance Communications asset sale speeds India telecom shakeout

Company's restructuring plan aims to settle debts, focus on B2B

Reliance Communications, until recently the No. 5 player in India's wireless telecoms market, will restructure and focus on business to business commumunications. (Photo by Mamoru Yago)

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.

Anil Ambani, chairman of Reliance Communications, speaks at a news conference in Mumbai on Dec. 26.

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.

"Not liquidation"

"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.

Experts believe the industry shakeout will leave just three or four big players in India: Bharti Airtel, Reliance Jio Infocomm, and the merged duo of Vodafone and Idea Cellular.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends April 30th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media