Anil Ambani’s troubled Reliance Communications (RCom), which recently agreed to sell its assets to elder brother Mukesh Ambani’s Reliance Jio to buy some time from lenders, is laying a 68,000-km undersea cable to carry data across Europe and Asia at a cost of $600 million, to be financed by project partners. RCom’s chief executive Bill Barney told reporters that the project is expected to be operational by the third quarter of 2020 and will have a revenue potential of $1 billion per year.
He further said that the new eagle system will revolutionise Global Cloud Xchange (GCX) a subsidiary of RCom and have a dramatic impact. The strategic bids for GCX will take place in coming weeks. The system, which will connect its base in India with Italy in the West and Hong Kong in the East, is expected to treble revenues in five years for its wholly-owned subsidiary Global Cloud Exchange, which is laying the cable, the company said on Tuesday. The cable will be financed by partners, whose numbers can go up till 30, Barney said.
The Anil Ambani-led company exited the consumer-facing wireless business late last year, to focus on the enterprise segment. The size of what is being billed as the “new RCom” is much smaller but it is expected to be much leaner, PTI reported. On December 28, just three days before its insolvency deadline, RCom signed a definitive agreement with Anil Ambani’s elder brother Mukesh Ambani’s Reliance Jio.
RCom has a total debt of Rs 45,000 crore, including Rs 20,000 crore in the form of foreign loans and bonds. After failing to seal two deals with Aircel and Brookfield, Anil Ambani finally turned to his elder brother for the deal. RCom will sell to Reliance Jio four wireless infrastructure assets for Rs 23,000 crore. RCom said that after the strategic debt restructuring (SDR) exit, it will be transformed into a B-to-B business.