Ericsson had threatened Anil Ambani, founder and chairman of RCom, with jail for contempt of court if the company did not pay up the total debt of 5.5 billion rupees – the equivalent of $80 million.
According to reports from India, Ambani (pictured) paid the debt with $69 million worth of help from his brother Mukesh Ambani, head of Reliance Jio, and his sister-in-law, Nita Ambani. A few years ago Anil Ambani was worth $31 billion; today Indian media reports say he’s worth 1% of that, $300 million. Older brother Mukesh Ambani is worth over $50 billion, say Indian estimates.
But though that part of the long story of the unravelling of RCom is over, the next stage is unclear. The Indian bankruptcy court, the National Company Law Tribunal (NCLT), now controls RCom’s future and is likely to organise a fire-sale of the assets that were due to be sold to Jio.
But in a surprise announcement late yesterday, those deals – agreed in December 2017 and August 2018 – “have been terminated … by mutual agreement”.
Jio had been due to buy RCom’s spectrum and other network assets, leaving only the enterprise telecoms network, data centres and the Global Cloud Xchange (GCX) subsea network, plus some real estate.
Now, conceivably, the NCLT can auction off all the assets and anyone, including Jio, can bid. RCom was expecting to receive $2.55 billion for all the assets – its total debt was $6.53 billion; however the regulator was blocking the spectrum sale, a key part of the now abandoned transaction.
What’s even more unclear is the fate of GCX, a subsidiary of RCom. Over the past few months, as the future of RCom has become mired in financial and legal difficulties, GCX has performed a “conscious uncoupling” from its parent – to use the 2014 expression made famous by Gwyneth Paltrow and Chris Martin.
Last year its senior management found two potential buyers for GCX, designed to wrest it away from RCom. One was I Squared Capital (ISQ), the private-equity owner of HGC Global Communications; the other was a consortium of three other US private equity groups, TPG, Blackstone and Värde. Both bid $1.1 billion.
But those bids were placed in August 2018, with term sheets due in January. It’s not clear whether the offers are still on the table.
A week ago GCX appointed the investment bank Lazard to advise on bids – and Bill Barney, CEO of GCX, told Capacity that he was hoping for more bids. Meanwhile GCX is pursuing its Eagle project to build a new high-capacity subsea cable from Mumbai, GCX’s home city, to the Middle East and Europe, and from Mumbai to China.
