RCom, Reliance Jio extend validity of asset sale agreement to June 28

Anil Ambani-led Reliance Communications (RCom) and his elder brother Mukesh Ambani’s Reliance Jio Infocomm (RJio) on Monday said they extended the validity of the asset sale agreement that the two firms had announced last year to June 28, 2019. 

The move comes at a time when RCom’s spectrum deal with RJio hangs in balance as the telecom department (DoT) has refused to clear the deal over non-payment of dues by RCom.  In December 2017, as part of debt-restructuring efforts, RCom had signed a Rs 25,000-crore deal with RJio. 

RCom shares fell 2 per cent during day’s trade to Rs 14.4 a piece on Monday. This is almost a 60 per cent drop from the January 1, 2018, price (Rs 35.4 apiece) after RCom-RJio’s agreement.

RCom expected to raise Rs 18,000 crore from the sales of its wireless assets to Jio and real estate assets to Canada's Brookfield, and pare some of its Rs 46,000-crore debt.

Apart from a Rs 3,000-crore sale of its fiber and related infrastructure assets in August, nothing much has happened in the deal, and RCom continues to reel under debt pressure.

Earlier this month, the Supreme Court had asked RCom to furnish a corporate guarantee of Rs 14,000 crore, following which DoT had to give it a No-Objection Certificate (NoC) for the deal. DoT, however, reversed its stand following RJio’s letter, where it sought assurances from the government that it won't be held liable for RCom’s past dues related to airwaves.

RJio, however, has agreed to extend the validity of the agreement . “Reliance Jio lnfocomm Limited, a subsidiary of Reliance Industries Limited, extended the term of the definitive agreement for the acquisition of specified assets of Reliance Communications Limited and its affiliates to June, 28 2019," Reliance Industries said in an exchange filing on Monday.

The acquisition is subject to receipt of requisite approvals from governmental and regulatory authorities, consents from all lenders, release of all encumbrances on the said assets and other conditions, said the company.

In August, RCom completed the sale of its fiber and related infrastructure assets, worth Rs 3,000 crore, to RJio in a transaction covering fiber assets of over 178,000 km across the country. In the same month, RCom reinstated bank guarantees worth Rs 774 crore with the DoT ahead of the timeline set by TDSAT and had asserted that its Rs 25,000-crore asset sale plans were "on track".

In a separate filing, RCom on Monday said the company and RJio have "extended the validity of the agreements signed on Dec. 28, 2017 for sale of towers, fiber, multi-channel networks and spectrum of RCom and its affiliates to June 28, 2019”. It however, added, “The transactions are to be consummated subject to various approvals that are in progress.” 

RCom has to pay Rs 550 crore to Ericsson as part of their agreement in the National Company Law Appellate Tribunal (NCLAT). Apart from Ericsson, RCom has to clear a debt of nearly 39 financial lenders and operational creditors. RCom has been urging the telecom department to grant it the "long-awaited no-objection certificate" to comply with a Supreme Court order in "letter and spirit". 

Senior officials of RCom and Jio had met the telecom secretary earlier this month to discuss issues raised by DoT over payment related to spectrum sale deal.

The NCLAT has adjourned the Ericsson matter to January 22 and has asked RCom arm Reliance Infratel to file an affidavit within three weeks, giving details about the payments that were due to HSBC Daisy Investments Mauritius. The firm has to make a payment of Rs 230 crore to RCom’s minority shareholders of Reliance Infratel, including HSBC Daisy Investments.