The recent announcement of Reliance Industries (RIL) to transfer Jio's debt internally was a step towards monetisation of the telcom arm, Emkay Financial said.
RIL has announced that it's setting up a wholly-owned subsidiary called 'Jio Platforms Limited' (JPL) for its digital platform initiatives.
RIL will infuse additional Rs 1.08 lakh crore of equity/OCPS into JPL, which will invest the amount in Jio. JPL will have Rs 5,000 crore in equity capital and acquire Rs 4,500 crore of equity shares and Rs 20,000 crore of OCPS in Jio from RIL.
RIL's present equity investment in Jio is Rs 65,000 crore. Through a separate arrangement, most debt of Jio will be taken over by RIL.
Both JPL and Jio would be debt free, in line with its global technology peers. Jio will only have spectrum-related liabilities (Rs 25,000 crore), CPs (Rs 23,000 crore) and some working capital liabilities.
With Jio's capex cycle easing down, this debt-free structure could facilitate early monetisation, including induction of strategic and financial investors in JPL.
RIL has mentioned receiving interest from potential partners after the recent AGM. There would be no immediate impact on shareholder value, consolidated debt and standalone credit profile of the company due to this transaction, it said.
The internal reorganisation is expected to conclude by March 2020.