Mukesh Ambani during a panel session at the World Economic Forum (WEF) in Davos, Switzerland. (Photographer: Simon Dawson/Bloomberg)

Billionaire Ambani Bails Out Brother by Buying Wireless Assets

(Bloomberg) -- Billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd. agreed to acquire spectrum, mobile-phone towers and fiber assets of his brother Anil Ambani’s Reliance Communications Ltd. helping the younger sibling cut debt at the embattled wireless carrier, the two companies said in separate exchange filings.

Reliance Jio emerged the highest bidder for assets and the sale is expected to be closed in a phased manner between January and March 2018, according to a statement from RCom on Thursday. The companies didn’t disclose a value for the transaction. The deal will include a cash payment and transfer of deferred spectrum installment payable to India’s Department of Telecommunication.

Mumbai-based RCom is seeking to cut total borrowings by $6 billion by March. RCom posted its first annual loss last March after Jio stormed into the market by offering free calls and data. That escalated a price war that has forced consolidation in the sector. RCom this week said it expects to get about 250 billion rupees ($3.9 billion) from the sale of its spectrum across four frequencies, its optical fiber network, and its more than 40,000 telecom towers. Entire proceeds will be used for repayment of RCom’s debt.

Reliance Jio is only paying for good quality assets that will enhance its depth of network, especially in rural areas, and raise data usage capacity, Shobhit Khare, a co-founder at Inertia Wealth Creators LLP, said via phone.

The sale is subject to receipt of necessary approvals from regulatory authorities as well as consents from all lenders, Reliance Jio said in its statement.

Last year, RCom agreed to share spectrum, networks and towers with Reliance Jio Infocomm, in a move that Anil Ambani referred as a “virtual merger” with the operator started by his older brother Mukesh.

RCom shares have surged 162 percent in the past seven trading sessions amid speculation that billionaire Anil Ambani had obtained agreements to sell enough assets to fend off the insolvency process.

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