According to experts, the deal places Reliance Jio in a favourable position as RCom's assets are valuable and will help the former to expand its market.
As big brother Mukesh Ambani comes to rescue Anil Ambani’s trouble RCom, the deal may help both brothers. RCom on Thursday said that the company has signed a definitive agreement with Reliance Jio for sale of towers, MCNs and fibre, under which it will sell its 4G services and 43,000 towers to Reliance Jio.
According to experts, the deal places Reliance Jio in a favourable position as RCom’s assets are valuable and will help the former to expand its market. COAI director general Rajan S Mathews said that the deal is clearly in line with the consolidation scenario in the telecom industry. “Emerging landscape of three dominant players in the telecom industry will be the new landscape,” he said. Rajan S Mathews estimated that Rs 25,000 crore would be a fair amount for the deal. The exact amount of the deal has not been disclosed yet.
“There is no doubt that Rcom’s assets are extremely valuable, plus the fact that they are best to Mukesh Ambani,” Mahesh Uppal, director, ComFirst India said. While Reliance Jio stands benefitted from the deal, RCom, now, would be able to repay a part of its Rs 45,000 crore debt. RCom was staring at December 28 deadline for conversion of debt to equity, because of which the company came up with debt recast plan on Tuesday to reduce its debt by monetising the assets of its wireless business.
Shares of RCom have more than doubled in last 6 days of trading. The share of RCom which emerged as a wealth destroyer and was on a continuous downslide from January 2016 has regained partially after Anil Ambani presented a revival plan on Tuesday to pull up the company from heavy debt burden. The stock of Reliance Communications surged as much as 110% to Rs 26.85 in a 6-day period from 19 December to 27 December.
First published on 28 December 2017 on www.financialexpress.com