Even as the Anil Ambani-run Reliance Communications is slated to shut down its voice call service from December 1, telecom major Bharti Airtel may soon end up buying it’s priced assets. According to a report in The Economic Times, Bharti Airtel is looking to buy select spectrum and some equipment of Reliance Communications (RCom), under a process being run by its lenders to sell assets of Rcom piece by piece and recover some portions of the roughly Rs 45,000 crore that it owes them. Reliance Communications is struggling with a heavy debt burden amid ongoing tariff war in the telecom sector which has eaten into margins.
Earlier this month, RCom had posted a consolidated net loss of Rs 2709 crore for the July-September period versus a profit of Rs 62 crore in the same quarter a year ago. ”We have expressed our interest only in buying select spectrum and some equipment,” a spokesperson for Bharti Airtel reportedly told the newspaper, when asked about its interest in RCom’s assets being put on the block by the debt-ridden telco’s lenders.
Last month, Bharti Airtel had Tata Group announced that they have entered into an understanding to merge Consumer Mobile Businesses (CMB) of Tata Teleservices Limited (TTSL) and Tata Teleservices Maharashtra Limited (TTML) into Bharti Airtel. According to a company statement, the merger is being done on a debt-free cash-free basis, except for Bharti Airtel assuming a small portion of the unpaid spectrum liability of Tata’s towards DoT, which is to be paid on deferred basis. Rcom’s spectrum sale process could see Airtel vying with Reliance Jio, which is also looking to intensify its 4G services.
The sale of RCom’s assets, including spectrum, network equipment and fibre, has evoked interest of many of the companies in the sector, including from tower providers like Indus, Bharti Infratel and Canada’s Brookfield for towers, said the economic times report.
After Airtel announced the acquisition with Tata Teleservices, experts pointed out that the it will bolster Airtel’s position vis-a-vis Reliance Jio, as Airtel will get access to 178.5 megahertz (MHz) spectrum (of which 71.3MHz is liberalized or free to trade) in the 850MHz , 1,800MHz and 2,100MHz bands, and help it strengthen its 4G coverage.
“The acquisition of additional spectrum made an attractive business proposition. It will further strengthen our already solid portfolio and create substantial long-term value for our shareholders given the significant synergies,” Sunil Bharti Mittal, chairman of Airtel, said in the statement. If Airtel gets access to Rcom’s assets, it will further help the company to strengthen its position against Reliance Jio.