Reliance Communications’ (RCom) wireless business is taken over by India’s richest man and billionaire Mukesh Ambani’s Reliance Jio. The cash rich company purchased RCom's wireless assets, including high-speed mobile bandwidth, over 100,000 miles of optic fiber including high-speed mobile bandwidth, over 43,000 cellphone towers and media convergence nodes.
Shares of Anil Ambani-dominated RCom surged nearly 35 per cent to $0.70 (Rs. 41.77) after the telecom carrier signed a "definitive binding agreement" to sell its wireless assets to Jio. The deal is expected to substantially help Jio increase its 4G coverage and take on India’s market leader Bharti Airtel more aggressively.
To recall, the two brothers divided up the Reliance empire founded by their father Dhirubhai Ambani, after an acrimonious succession battle following his death in 2002. However, in 2007 Kokilaben Ambani, the widow of the late founder brokered a peace accord between her warring sons.
Better sense prevailed among the Ambani siblings and in 2013, the Ambanis announced that they would share a fibre optic network for their rival telecoms companies. And as one executive who worked for both Mukesh and Anil under Jio and RCom respectively, while referring to the Spectrum deal told India’s The Hindu Business Line, “Until then, everyone thought that the two brothers could not see eye-to-eye. But, then, they decided to bury the hatchet as they saw the importance of synergy.”
The RCom- Reliance Jio deal is a cash deal and includes transfer of deferred spectrum instalments payable to India’s department of telecommunications. RCom pledged to utilise the proceeds from the sale of its telecom assets to pay off its $7 billion debt. For those unfamiliar, Jio has acquired a record 100 million subscribers in just 14 months, and is now aiming to increase its footprint further by acquiring RCom’s infrastructure.
Meanwhile, while announcing his exit from the mobile business, the younger Ambani said, "This is a crisis of the wireless telecom sector and it has engulfed many people and many companies. This is something which is not for 10 players to enjoy. This is for two or three or four players to enjoy."
The companies expect the recent transactions to close in a phased manner by March 2018, subject to lenders’ and other approvals.