Telcos, PE firms show interest in RCom assets

By Surajeet Das Gupta & Abhineet Kumar , Business Standard, New Delhi/Mumbai | In Digital | November 08, 2017
RCom has suggested its consortium of banks convert part of their loans into a 51 per cent majority equity in the truncated company.

Telecom companies and private equity (PE) funds have shown preliminary interest in buying the various assets Reliance Communications is monetising. As well as a stake in the truncated RCom, which will primarily have only its business-to-business (B2B) segment.

Under a debt restructuring plan, apart from selling assets like telecom towers, spectrum, optical fibre and real estate, RCom has suggested its consortium of banks convert part of their loans into a 51 per cent majority equity in the truncated company.

Reliance Communications

Airtel has shown interest in buying some of the spectrum, as well as telecom equipment of RCom's wireless business, up for sale. Its spokesperson said they'd expressed interest in buying only these.

It is unclear if the other telcos are eyeing the assets or are interested in buying out the banks' stake in the truncated company after the asset sale.

Reliance Jio, Vodafone and Sistema (which merged its business in RCom) are believed to be the others interested. The three, however, declined to comment on the issue.

A new debt restructuring plan announced a few days before envisages the raising of Rs 17,000 crore by monetising their towers, spectrum, fibre assets and nodes. And, to raise another Rs 10,000 crore by monetising the real estate. The bank consortium has been asked to convert part of their loans ( Rs 7,100 crore) into a 51 per cent stake in what is left. This will substantially reduce the company's secured debt of Rs 40,000 crore, leaving the truncated RCom with Rs 6,000 crore of these.

According to sources, PE funds are interested in taking a stake if the banks agree to taking the 51 per cent stake. These include KKR, TPG and Carlyle. Beside global telecom entities Telstra of Australia, Telekom Indonesia and PCCW in Hong Kong.

RCom did not comment on the matter. The PE funds also declined to comment. E-mails to Telstra and PCCW did not elicit a response.

The truncated RCom will not include either the wireless (subscribers and spectrum) or the tower business. It will be a B2B business - data centres, subsea cables and enterprise business. The company runs five subsea cable systems connecting four continents.

It has nine data centres across the country and a thriving enterprise business, with about 35,000 corporate clients. According to estimates, this business currently has revenues of Rs 10,000 crore annually, the operating earnings being Rs 1,500 crore.

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