New Delhi/Mumbai: Reliance Jio Infocomm Ltd appears to have emerged as the highest bidder for most of the assets put on the block by the beleaguered Anil Ambani-promoted Reliance Communications Ltd (RCom), three people aware of the development said.
“Bids have been received for all five asset packages. Reliance Jio has emerged as the highest bidder for 3-4 of the five asset packages of Reliance Communications. It seems unlikely that any other company can outbid Reliance Jio,” said one of the three people cited above.
A banker, the second person cited above, confirmed that Reliance Jio was the highest bidder and that the Mukesh Ambani-led firm has shown interest in buying optical fibre assets, spectrum and tower infrastructure.
“Others did not match the price that Reliance Jio was willing to offer,” this person added.
The third person mentioned above also said that the company is interested in acquiring spectrum, tower assets and optic fibre for which it has a sharing or trading agreement with the Anil Ambani-promoted firm.
Emails sent to RCom and Reliance Jio remained unanswered till press time.
RCom’s assets on the block include its real estate, fibre network, enterprise business, towers and spectrum.
Reliance Industries Ltd, Reliance Jio’s parent, is celebrating its 40th foundation day in Mumbai on Saturday, which also marks the beginning of a week-long celebration at the company as founder Dhirubhai Ambani’s birthday falls on 28 December. Mint has learnt that Reliance Industries is expected to make announcements related to the future of the company at the event.
If Reliance Jio indeed buys out RCom’s assets, it would be the latest in a wave of consolidation in the telecom sector, which is in the midst of a brutal tariff war triggered by the RIL subsidiary.
Faced with a mountain of debt, in June, lenders to RCom had invoked strategic debt restructuring (SDR) provisions after the company presented a restructuring plan that involved hiving off and merging its wireless business with Aircel Ltd and selling a majority stake in its tower unit to Brookfield Infrastructure. Under the plan, lenders gave the company a breather on its interest payments until December 2018.
However, the merger with Aircel fell through, and on 20 October, the company presented a fresh debt repayment plan to its creditors. Under the new plan, the company envisages raising Rs27,000 crore through sales of assets including spectrum, real estate and towers. It said that a further Rs7,000 crore will be reduced after lenders convert this into equity for a 51% stake.
Lenders have appointed Credit Suisse to help with bidding. SBI Capital Markets is advising the company on the sale process. Lenders have also appointed an independent committee headed by former Reserve Bank of India deputy governor S.S. Mundra to evaluate bids.
“The deal with Reliance Jio is set to be announced soon and the funds received from the sale are expected to address a major portion of the Reliance Communications debt,” the first person said.
RCom has already sold its direct-to-home business Reliance Digital TV and announced optimization of its 2G and 3G wireless operations.