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Jio set to obtain RCom’s assets for $3.75B

Jio set to obtain RCom’s assets for  $3.75B

Indian operator Reliance Jio Infocomm is acquiring the assets of its beleaguered rival Reliance Communications for almost INR240 billion ($3.75 billion).

The agreement will see Jio take over RCom’s entire spectrum holding, along with all of its towers, fibre optic cables, and other physical infrastructure assets. While the exact fee has not been confirmed, RCom’s spectrum holding alone is worth around INR190 billion.

Following the collapse of its scheduled merger with Aircel, RCom has been looking to shutter its wireless operations and sell off assets as a means of paying down its debt, which is believed to total around INR450 billion. RCom attributed the deal’s failure to “inordinate delays caused by legal and regulatory uncertainties”.

After the operator failed to meet deadlines for repaying instalments of this debt, insolvency proceedings were initiated by the consortium of local and overseas banks which hold RCom’s debt. Reports in late December indicated that Jio was the most likely candidate to obtain RCom’s assets.

Reliance Jio is owned by Reliance Industries, which split in 2005 following a dispute between the brothers Mukesh and Anil Ambani. The former now controls Jio, having retained the group’s oil and gas unit after the split, while the latter took the telecoms and power businesses.

If the deal goes ahead, RCom would be folded back into Reliance Industries – marking yet more major consolidation in the formerly crowded Indian market. When Jio began offering services in September 2016, its discounted services undercut the competition, prompting a wave of consolidation between larger operators. Vodafone India is merging with Idea Cellular, while Airtel is acquiring the Indian unit of Telenor along with Tata Sons' mobile operations.