Anil Ambani-owned Reliance Communications (RCom) on Monday said it will sell its direct-to-home (DTH) subsidiary Reliance BIG TV to Veecon Media and Television.
The companies have entered into a binding memorandum of understanding to this effect and as part of the agreement, Veecon will retain nearly 500 employees of Reliance BIG TV.
Veecon will acquire the entire shareholding of Reliance BIG TV with business on an as-is-where-is basis, along with all existing trade liabilities and contingent liabilities, according to a statement from Reliance Communications (RCom).
The financial details of the deal were not immediately disclosed.
"The existing DTH licence of BIG TV shall be renewed with the submission of the required bank guarantees with the Ministry of Information and Broadcasting by the buyer," the statement said.
Reliance BIG TV's 1.2 million customers will continue to enjoy uninterrupted services. "The transaction will help reduce the liability of unsecured creditors, benefiting all stakeholders, including lenders and shareholders of RCom," it said.
The deal is subject to requisite approvals from licensors, regulatory authorities and lenders of RCom. The transaction is part of RCom's efforts to focus on B2B businesses. RCom, which plans to shut down voice call service from December 1, 2017, has also made a comprehensive debt resolution plan to its domestic and foreign lenders.
It had earlier stated that the lenders would convert part of their debt to equity to gain 51% control of the company. The company will also sell telecom towers and real estate business to pay off Rs 27,000 crore out of Rs 45,000 crore debt on its books, it had stated last month.
RCom is also shutting down its 2G business, i.e voice call services from December 1 while it will focus on 4G -- data services in the future. It decided to shut down its voice call services after the merger deal with Aircel failed due to regulatory and legal issues. Its tower deal with Brookfield is also learnt to have failed.
Telecom regulator Telecom Regulatory Authority of India (Trai) has issued a notification to all telecom players last week informing them of the development. Trai said that RCom on October 31, 2017, intimated it that "RCL (Reliance Communications Limited) shall provide only 4G data services to its customers and as a result will discontinue to provide voice services to the subscribers... with effect from 1st December 2017." Trai asked all telecom operators to accept the request of RCom subscribers till December 31, 2017, for porting out.
Earlier this October, the company announced a plan to reduce its debt by Rs 25,000 crore through monetisation of towers, fibre assets, real estate and optimisation of the spectrum portfolio. RCom's spectrum portfolio has a gross value of over Rs 19,000 crore for balance validity period, based on last auction pricing. An independent third party valuation for development of 125-acre prime real estate in Navi Mumbai established significantly higher present value monetisation potential of Rs 10,000 crore, the company had said earlier. Currently, RCom is under strategic debt restructuring till December 2018 where banks won't collect interest payment.
The telecom industry has shaken up since the entry of a new player Reliance Jio, owned by Mukesh Ambani, last year. Since then the industry is in a consolidation phase where Vodafone and Idea Cellular have announced a merger, Airtel has acquired Telenor and wireless business of Tata Group, RCom and Sistema Shyam have merged their wireless business.
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