A logo hangs above a Reliance Communications Ltd. shop in Mumbai, India. (Photographer: Abhijit Bhatlekar/Bloomberg)

Anil Ambani's Wireless Unit Seeks to Cut $6 Billion of Debt

(Bloomberg) -- Billionaire Anil Ambani’s Reliance Communications Ltd. said it was in the final stages of selling some assets as it aims to exit a debt restructuring program and cut total borrowings by $6 billion. The company’s shares surged.

The embattled mobile carrier will reduce total debt to 60 billion rupees ($936 million) from 450 billion rupees as of October end, Ambani said at a briefing on Tuesday. The company, known as RCom, plans to settle on buyers for assets including its telecom spectrum, towers, optical fiber network and real estate, with all transactions to close between January and March, it said.

The announcements follow the collapse in October of a merger with Aircel Ltd. and the failure of a planned tower sale to Brookfield Infrastructure Group amid a mobile services price war that hurt profit at the biggest carriers and pushed the smaller ones out of business. RCom is now in the final stages of negotiating definitive agreements for sale of assets, Ambani told reporters.

Anil Ambani's Wireless Unit Seeks to Cut $6 Billion of Debt

“All the final binding bids have already been received by the lenders and we expect full and financial closure of all the transactions to be completed between January and March 2018,” Ambani said. There will be no write-offs or equity conversion for lenders and bond holders, the company said.

Reliance Communications expects to get about 250 billion rupees from the sale of its spectrum across four frequencies, its optical fiber network, and its more than 40,000 telecom towers. Another 100 billion rupees will be raised by developing real estate on land it owns in a Mumbai suburb. A stake in the company may be sold to strategic investors. Ambani did not give details of the deals being discussed.

RCom shares surged as much as 42 percent before settling 32 percent higher at 21.50 rupees in Mumbai on Tuesday. It has gained 82 percent in the past five trading sessions, reducing this year’s loss to 37 percent.

Creditors including China Development Bank and the Indian unit of network-equipment maker Ericsson AB have sued, seeking to compel repayment by the company. Earlier this month a public-relations firm became the latest to ask an Indian tribunal to place RCom under insolvency proceedings after it failed to pay dues.

The company’s proposal has the backing of all banks, including the Chinese lenders, Ambani said on Tuesday.

“This is monetization, not liquidation and we are running a transparent process. Bidders can bid for different frequencies in different circles," Ambani said, adding that on completion of the deals "Reliance Communications will have an enterprise value of 150 billion rupees."

After the company sells its assets, it will become a communications services provider for large businesses, with half of its revenues coming from customers outside India. It will retain its enterprise business in India and the international long distance operations.

RCom posted its first annual loss last March after Anil Ambani’s elder brother Mukesh Ambani, India’s richest person, stormed into the market by offering free calls and data with Reliance Jio Infocomm Ltd. That escalated a price war that has forced consolidation in the sector.

Reliance Communications had till this month to make progress on asset sales, or see debts converted to 51 percent of the company’s equity under India’s restructuring rules. It had defaulted last month on a dollar bond due in 2020, sending its shares and bonds to record lows.

©2017 Bloomberg L.P.