The mega telecom deal involving acquisition of wireless assets of debt-laden Reliance Communications by Reliance Jio is a “good and welcome development” that fully protects lenders’ interest, a top SBI official said on Friday.
At the same time, the deal also sets a great example for promoters of other stressed companies, State Bank of India (SBI) Chairman Rajnish Kumar has said.
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The two companies, on Thursday , announced a blockbuster deal under which Reliance Jio, promoted by Mukesh Ambani, will acquire the wireless assets of the troubled RCom, a company owned by younger sibling Anil Ambani.
The transaction, which includes acquisition of spectrum, towers, and optical fibre network is estimated, by the banking circles, to be in the range of ₹ 24,000 crore to ₹ 25,000 crore.
”...in general terms, I can say that it is a very good and welcome development where the banks have been fully protected and no loss is expected despite the fact that there is a stress in the telecom sector,” Kumar said.
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The proceeds of the deal, slated to be completed between January-March 2018, will provide much-needed respite to the Reliance Communications (RCom) whose debt stands at a staggering ₹ 45,000 crore. The company hopes to use the entire proceeds to pare its debt.
Just two days before the deal was unveiled, RCom announced its exit from the strategic debt restructuring (SDR) and outlined an ambitious revival plan that involved zero write-offs to lenders.
In a statement issued on Thursday Jio -- which amassed 160 million customers just over a year into 4G operations -- said these assets being acquired are strategic in nature and are expected to contribute significantly to its large scale roll out of Wireless and Fiber-to-Home and Enterprise services.