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Reliance Realty, a subsidiary of Reliance Communications (RCom), has issued a corporate guarantee of ₹1,400 crore to the Department of Telecommunications (DoT) as per a Supreme Court order. Following the furnishing of the guarantee, RCom is expected to get DoT approvals for spectrum trading this week.
The move will help the Anil Ambani group firm speed up its delayed asset sale plans and reduce debt to about ₹25,000 crore.
Spectrum trading
The Supreme Court in its November 30th order, had asked DoT to approve RCom’s earlier proposed spectrum trading plans within 7 days, while it also asked the Anil Ambani group firm to furnish corporate guarantees of ₹1,400 crore within two days. “As per the said order, DoT is to approve the spectrum trading within this week,” an RCom spokesperson said, adding, RCom’s asset monetisation initiatives are proceeding as per plan.
RCom was expecting to raise ₹13,000 crore from the sale of its spectrum and towers in the final leg of its proposed debt reduction plans. Following the completion of spectrum and tower sales, RCom intends to pay off Ericsson and minority shareholders of Reliance Infratel Ltd, including HSBC Daisy Investments.
Following the completion of the spectrum deal, RJio will add ₹7,000 crore of RCom’s deferred spectrum liabilities on to its books. RCom’s present is about ₹40,000 crore. Last year, Ericsson had moved the National Company Law Tribunal (NCLT) seeking bankruptcy proceedings against RCom and its two units (Reliance Infratel and Reliance Telecom) to recover dues of ₹1,150 crore. This move had jeopardised RCom’s bailout package.
Earlier in August, in its first tranche of asset transfer, RCom closed the sale of its media convergence nodes (MCNs) and related infrastructure assets worth ₹2,000 crore to Mukesh Ambani-backed Reliance Jio Infocomm (RJio). The company had transferred 248 nodes, covering about 5 mn sq. ft. of area used for hosting the telecom infrastructure. In December last year, RJio said it will acquire the wireless assets of RCom, paving way for another deal between the brothers – Mukesh and Anil – who had parted ways in 2005, carving the Reliance empire into two.
Following the announcement, RCom shares soared 18 per cent in the morning hours and closed up 16.47 per cent at ₹16.62 on a volatile BSE, but ended up 0.13 per cent on Friday
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