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RCom terminates telecom asset sale deal with RJio

CALL ENDS: Deal called off with mutual consent; RJio may still buy the assets through NCLT route

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Anil Ambani
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Anil Ambani's Reliance Communications on Monday terminated its proposed deal to sell off its telecom assets to Reliance Jio, owned by Mukesh Ambani, which could have been one of the biggest deals in the telecom industry.

The two firms owned by Ambani brothers had entered into an agreement to sell certain specified telecom assets about 15 months back but due to various regulatory and other issues the deal was called off with mutual consent.

RCom taking National Company Law Tribunal (NCLT) route to seek fast track resolution of its debt is one of the major reasons for calling off the deal, which was estimated to be around Rs 20,000-25,000 crore. However, experts say Reliance Jio might buy assets once it goes for bidding through NCLT process.

RJio could be a potential buyer as it needs to bolster its spectrum and tower holdings. No other telecom player has money or any requirement to bid for the assets of RCom, as per people tracking the sector.

"The said transactions have become incapable of being consummated in accordance with the terms thereof, on account of various factors and developments since the execution of the said agreements nearly 15 months ago," RCom said in a regulatory filing.

However, RCom did complete a part of the deal -- sale of switching nodes and fibre for Rs 5,000 crore to RJio.

NCLAT on February 4, 2019 restrained the sale, transfer or alienation of any movable or immovable property of RCOM, RTL and RITL (RCom Group companies). The company's lenders have stated that it is not possible for them to sell the specified assets, and therefore, the NCLT process for debt resolution should be reinstated, RCom said in the filing.

Earlier in the day, RCom paid Rs 458.77 crore to Swedish telecom equipment maker Ericsson as per Supreme Court directive after a year-long legal battle, otherwise which Anil Ambani would have faced a jail term.

The deal was called off due to reasons such as non-receipt of consents/objections from RCom's over 40 foreign and Indian lenders in relation to the proposed transactions even after 15 months and over 45 meetings as well as the non-receipt of permissions and approvals from the telecom department, the company said.

"RCom Group is committed to a comprehensive resolution of their overall debt, with transparency, certainty and finality, through the NCLT process," it said.

In December 2017, RCom had signed a deal with RJio for the sale of wireless spectrum, tower, fibre and media convergence nodes assets. The amount from the deal would have helped the company in reducing its high debt of around Rs 46,000 crore. The Department of Telecommunications (DoT) had refused to give a non objection certificate (NOC) to the RCom's spectrum trading deal owing to its past dues.

In February, the RCom Board decided to move NCLT under the Insolvency Bankruptcy Code, 2016, as no decision could be reached even after 18 months of its debt restructuring plan to pay off lenders.

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