The lenders of Reliance Communications have got initial bids for the company’s assets from the three big telecom companies in India, CNBC TV18 reported, quoting banking sources.
The Anil Ambani Group company is under the control of its lenders after it ran aground due to high debt load and the emergence of 4G services.
Three big players have emerged as bidders for the assets, the TV channel said, including Bharti Airtel, Reliance Jio and Idea-Vodafone.
They have expressed their interest in RCom’s spectrum, fiber, some of its towers and its enterprise business.
The bids are in the nature of ‘piecemeal’ buyout, it said.
In other words, the companies have shown interest in the blocks of spectrum, towers and fiber that they are specifically interested in, and not for the whole of the asset across India.
Reliance Communications owes about Rs 45,000 cr to various lenders including banks.
With the business unable to generate enough cash to service the debt, the lenders — along with the owners — are trying to sell off parts of the company to raise as much money as possible and pay off the debt.
While the promoters and shareholders are trying to maintain a stake of 49% in the resulting company even after the whole process is over, there is no certainty about exactly how much will be left over for the shareholders.
According to the law, shareholders enjoy lower priority than lenders and get to keep only what is left after all the lenders’ dues have been settled.
RCom has one of the most widespread fiber networks in India as well as some of the most valuable pieces of 4G spectrum in the country.
However, a large chunk of the company’s 4G spectrum is currently in use by Reliance Jio under a sharing agreement, and as such, cannot be sold as an unencumbered asset.
Nevertheless, Reliance Jio is likely to ensure uninterrupted availability of the spectrum for its network by buying the shared spectrum out.
That will still leave a large chunk of recently acquired spectrum from MTS on the table, in addition to 2G spectrum in the 1800 MHz band and 3G/4G spectrum in the 2100 MHz band.
The 1800 MHz band spectrum may not find many takers as it is ‘unliberalized’ and the buyer will need to pay ‘liberalization charges’ to the government if they want to use it for 4G.
CNBC TV18 also said interested buyers will now be asked to put in binding bids to take the process forward.
Thanks to RCom’s license and an agreement with Reliance Jio, the Anil Ambani company can continue to serve its customers even if its sells every one of its estimated 50,000 towers and all its spectrum.