Mukesh Ambani may now have a reason to buy Anil Ambani's bankrupt RCom, say reports
- This March, RIL and Reliance Communications (RCom) terminated the sale agreement by mutual consent after Department of Telecommunications (DoT) refused to clear the sale
- The lenders of RCom too wanted the new buyer to take some of the debt off the books, which was at ₹46,000 crore.
- RCom is sitting on valuable assets like 43,000 telecom towers and 4G spectrum, apart from real estate.
Mukesh Ambani’s Reliance Industries might revive its plans to purchase the assets of bankrupt Reliance Communications which belongs to his brother, Anil Ambani, according to reports.
This March, Reliance Industries had to go back on its plans to buy Reliance Communications due to the many legal and other hurdles created by the by Telecom Ministry and the younger Ambani's lenders. Both the parties terminated the sale agreement by mutual consent after Department of Telecommunications (DoT) refused to clear the sale as they still owed them payments.
The lenders of RCom too wanted the new buyer to take some of the debt off the books, which was at ₹46,000 crore. However, the buyer was not too keen on taking it on, leading to differences.
Now that RCom is in bankruptcy court, the situation might have a buyer’s advantage.
For Mukesh Ambani’s Jio, which started operations on 2016, RCom’s assets will come in handy. Not only is Jio planning to gain as much as half the share of the country’s telecom usage, it is also building a massive fibre-to-home infrastructure and cater to the data needs of 75 million homes.
Jio is also raising capital and taking debt off its books by bringing in investors into investment trusts (INVITs), which might provide it with the headroom for an acquisition. This is expected to bring in as much as ₹20,000 crore, as per reports.
Even as RCom shut shop, it is sitting on valuable telecom assets. For one, it has 43,000 telecom towers and 4G spectrum (airwaves) in the 850 MHz band, apart from wireless infrastructure, cable, switching nodes and much more.
RCom is also sitting on real estate in the prized Navi Mumbai SEZ area, which was acquired by the father, Dhirubhai Ambani himself. In Anil Ambani’s words, the land assets at Dhirubhai Ambani Knowledge Centre (DAKC) are valued at over ₹26,000 crore, said the Business Today report.
RCom has been on Mukesh’s radar for a long time, as it is said that he had envisioned the group’s entry into the telecom sector, and laid the groundwork. However, when the group split in 2004, RCom went into Anil’s kitty.RC
Gradually, as RCom shifted technology from CDMA to GSM, it had made investments to expand and shift gears. By then, new competition had come in the form of Tata Docomo that took pricing power away, throwing it into trouble. The rest of the damage was done by evolving technologies which RCom could not keep up with, or even sell assets like it wanted to.
All in all, RCom almost took the promoter Anil Ambani to jail. Supreme Court had ordered him to pay dues to the tune of ₹460 crore to Ericsson its vendor or go to jail. Mukesh had to step in and make the payment last minute to save him.
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