As the bankrupt telecom operator, Reliance Communications, seeks to sell its assets, it has found many takers for its sale, and it includes some of the big names like Bharti Airtel and Reliance Jio Infocomm. As per a new ET report, the people aware of the matter said that Reliance Jio Infocomm, Bharti Airtel, asset management firms and telecom tower operators have sent Expression of Interest (EoIs) thus showing interest in the acquisition of assets of Reliance Communications. Although the list of companies showing interest in the asset sale is long, it does not include Vodafone Idea, which is currently having the worst financial troubles in the industry.
Private Equity Firms Also Join the Line
As per the person aware of the matter, “Around 10-12 firms have sent in their expressions of interest. Bharti Airtel and Jio are part of it.” The person also added that legal battle in this ongoing process would be a key concern. When posed with questions, Bharti Airtel, Reliance Jio and Vodafone Idea did not return any comments. Same was the case with Deloitte which has been given the responsibility of carrying out the court-monitored bankruptcy proceeding of Reliance Communications.
Among the assets that have been put up for sale are airwaves in 14 of India’s 22 telecom circles, about 43,000 telecom towers under the name of Reliance Infratel and some fibre and real estate assets. Also, RCom’s licenses over the 800 MHz spectrum are slated to expire on July 2021. Speaking of the debt, which the Anil Ambani led telecom operator holds, the telco has been confirmed to be in neck-deep debt of about Rs 46,000 crore. As many as 39 financial creditors have claimed Rs 49,193 crore from the insolvent telco. In addition to financial lenders, RCom and its subsidiaries also have numerous operational creditors as well.
Reliance Jio's Deal with RCom Falls Apart
To recall, a few weeks back, Reliance Jio had almost bought the assets of Reliance Communications, but the deal went bust when the Department of Telecommunication (DoT) brought up an issue of who would take the liability of payments of spectrum after the deal was made. This led to Reliance Jio retracting from the acquisition of the spectrum, and the deal fell apart forcing Reliance Communications to move ahead to insolvency.
The high interest in the spectrum and assets shows that for telcos like Bharti Airtel and Reliance Jio, these assets will be useful in their plans for rapid 4G expansion and 5G launch. The private equity firms are also heavily interested in the sale, meaning that the competition between the companies can get fierce. However, the equity firms will likely lean more towards the assets rather than spectrum.
Legal Troubles Between DoT and Bankrupt Telcos
The big hurdle in the sale of these assets and especially the spectrum from the insolvent telcos will be the legal troubles between the bankrupt operators and the Department of Telecommunications (DoT). As per the DoT, while the telcos are free to trade spectrum, it is, in the end, the property of government which is leased. As such, it should be returned to the government unless payments and all arrears are made. These arrears would include spectrum usage charges and one-time spectrum fee. Even then, the telecom operators are ready to buy the spectrum since it would come at a much cheaper cost as compared to auctions held by the government.