RCom-RJio in ‘virtual merger’: Anil Ambani
Reliance Communications (RCom) and Reliance Jio (RJio) are working together through a “virtual merger” of their infrastructure such as spectrum and towers and the two companies are reaping the synergies, RCom Chairman Anil Ambani said on Tuesday.
“There are two committed brothers, Mukesh Ambani and Anil Ambani, both working relentlessly to fulfil Dhirubhai Ambani’s telecom dream for India,” he told shareholders at the annual general meeting. “What we have accomplished is a virtual merger between Rcom and RJio. Our spectrum is shared, our network is shared, our towers are shared, our fiber shared, our voice is shared and every effort to reap synergies, every effort to lower our costs, to be capital light has been achieved,” Mr. Ambani said.
The company has a full 4G LTE (long term evolution) network on a pan-India basis without any capital expenditure on RCom’s balance sheet. With the assets shared and traded with RJio, the entire capital expenditure has not been borne by RCom, Mr. Ambani said.
The billionaire brothers in January reached an agreement as part of which elder sibling Mukesh’s RJio would buy spectrum from Anil’s RCom across nine circles. It also included spectrum sharing across 17 circles.
“RCom and R-Jio are like two bodies and one soul,” said a Reliance Group shareholder, referring to RCom having been originally started by Mukesh Ambani in 2002, before the brothers split the group’s businesses.
Spectrum auction
RCom is also unlikely to bid at the upcoming spectrum auction given that RJio has deposited Rs.6,500 crore as earnest money deposit, according to Paras Bothra, Head of Research, at Ashika Stock Broking.
RCom’s ‘virtual merger’ with RJio and the merger of its wireless business with Aircel, had now positioned the company in the role of a consolidator in the telecom industry, Mr. Ambani said.
“We have stitched alliances to maximise cost and operational synergies. We have turned a consolidator, when most saw RCom as a target for a buyout.”
The proposed merger with Aircel will create wealth for shareholders, he said.| “RCom will be a transformed player in the next one year. The combined entity will have asset base of over Rs.65,000 crore and net worth of Rs.35,000 crore,” Mr. Ambani said.
RCom expects a deal soon for its tower business, he said. “Talks for tower business monetisation are at an advanced stage. We are targeting 75 per cent debt reduction in the next one year.”
Source: The Hindu
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