RCom will hold on to its other businesses, including Global Cloud Xchange (GCX) subsea cable operation as well as data centres and enterprise telecoms in India.
The deal, which will cut RCom’s debt of 450 billion rupees ($7 billion), marks the likely end to the most expensive sibling rivalry in telecoms history.
RCom is owned by Anil Ambani and his older brother Mukesh Ambani owns Reliance Jio, whose launch in 2016 has led to a series of mergers in the financially stressed Indian mobile industry.
Neither RCom nor Reliance Jio put a size on the deal, but well-informed Indian business media put it at 240 billion rupees ($3.77 billion).
Reliance Jio won the deal after a competitive tender, said RCom. It “emerged as the highest bidder in a transparent process conducted under the supervision of a high-powered bid evaluation committee, comprising experts from banking, telecom and law”.
RCom held the tender as creditors gathered, including the China Development Bank and the equipment maker Ericsson. If regulators agree, Reliance Jio should be able to take over RCom’s mobile assets in a phased process by the end of March, said the companies. An earlier plan to merge with rival mobile operator Aircel foundered in October 2017.
The assets that Reliance Jio has bought include 122.4MHz of 4G spectrum in the 800, 900, 1,800 and 2,100MHz bands; over 43,000 towers, which RCom had been trying to sell independently; 178,000 route kilometres of fibre; and 248 media convergence nodes.
RCom said it “will utilise the proceeds of the monetisation of this cash deal solely for pre-payment of debt to its lenders”.
The deal does not include GCX, which in November 2017 announced a major investment in a new subsea cable, Eagle, that will stretch from Europe to China via India. The company is about to announce a significant investment in data centres in Mumbai. Capacity magazine has an interview with RCom and GCX CEO Bill Barney in the December/January issue.
Reliance Group, which owns RCom, has a net worth of $15.2 billion, said RCom in a statement, and made a net profit of just $800 million.
