Mumbai: The debt-ridden Reliance Communications is to stay within the family as Anil Ambani has signed an agreement to sell its wireless assets to telecoms arm of elder brother Mukesh Ambani's oil conglomerate Reliance Industries Ltd. The decision coincidentally came on the day of their father Dhirubai Ambani's 85th birth anniversary, giving the move a symbolic colour.
The two companies made the decision public in two different statements. The amount of the transaction, however, has not been revealed. Banking sources speculate the deal to be worth Rs 24,000-25,000 crore.
Noting the development, industrial bodies expressed their appreciation for it. "The move shows that the industry continues to consolidate around serious players who have deep pockets and financial where-with-all to play effectively and delivery value to customers in future," Industry body Cellular Operators' Association of India or COAI Director General Rajan Mathews told news agency PTI. He further said the deal is "good for the industry".
The sale marks the return of the telecom company back to the fold of Reliance Industries, which forayed into telecoms in 2002, spearheaded by elder Ambani, under the name of Reliance Infocomm Ltd.
The deal is being seen as homecoming-of-sorts for RCom. A feud between the Ambani brothers in 2005 led to the split of Reliance Industries when Mukesh Ambani kept the cash cow oil and gas business and Anil Ambani walked away with telecoms and power.
The launch of Reliance Jio marked Mukesh Ambani's reentry into the telecom space in September 2016. Jio, with cut-price data and free voice service, rattled the telecom industry pushing RCom into a debt spiral.
A statement by Jio -- which now has over 160 million -- on Thursday said the assets covered under the latest deal are strategic in nature and expected to contribute significantly to its large scale roll out of Wireless and Fiber-to-Home and Enterprise services.
The latest deal will bring immediate relief to RCom, which is reeling under Rs 45,000 crore debt, and the company hopes to use the entire proceeds to pare its liabilities.
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