RCom tipped to exit India despite wireless sale setback - Mobile World Live

RCom tipped to exit India despite wireless sale setback

22 MAR 2018

Reliance Communications’ (RCom) 15-year stay in the Indian telecoms sector could be coming to an end, as it reportedly entered into talks to sell off its enterprise and wholesale assets.

The troubled Indian company, which is in the process of selling most of its consumer wireless assets to Reliance Jio Infocomm to reduce a debt load of around INR450 million ($6.9 billion), had planned to position its telecoms business towards serving corporate customers after shuttering its mobile arm.

But, in what appears to be change in strategy, Financial Times reported the restructuring plans had now expanded to include the potential sale of its enterprise telecoms assets. This includes the company’s international submarine cable, in addition to its fixed-line network and data centre facilities in India.

Two of FT’s sources said five companies, including US private equity company I Squared Capital, are interested in acquiring the assets, which could reach a value of around $1.2 billion.

Four companies, meanwhile, are interested in acquiring a subset of the assets. Hong Kong telecoms business PCCW and Russia-based Sistema were also named by FT as interested parties.

Mobile exit setback
RCom’s consumer asset sale plan, which is expected to cut its debt by INR250 billion, suffered a setback after India’s Supreme Court today (22 March) declined to grant permission for the plan to go ahead.

Reuters reported the court said it will hear the case again in two weeks (5 April), marking a blow for the operator which had hoped to complete the transaction by the end of this month.

Legal action triggered by Ericsson also complicated matters. The Sweden-based vendor is claiming $156 million in unpaid service fees from RCom and a arbitration tribunal ruled RCom cannot complete its asset sale without permission.

RCom, controlled by Indian billionaire Anil Ambani, struggled to keep pace with cut-throat competition in the market following the entrance of Reliance Jio in 2016.

The company attempted to beef up its operations by proposing a merger with smaller rival Aircel, but the deal fell through.

RCom entered the Indian telecoms market in 2002 through conglomerate Reliance Industries, before the business was split in 2005.

The asset sale to Jio will see most of RCom’s mobile assets brought back into the fold of Reliance Industries, which is controlled by Ambani’s brother Mukesh Ambani.

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Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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