Anil Ambani’s Reliance Communications is in discussions with TPG, Blackstone and other bidders over the sale of its remaining telecommunications assets in a transaction that would mark the tycoon’s formal exit from India’s telecommunications sector.
According to people involved in the deal, the sale of RCom’s international submarine cable network, fixed-line telecoms network and data centres has attracted bids from I Squared Capital and a consortium comprising TPG, Blackstone and Varde. Both bids have valued Mr Ambani’s remaining telecommunications business at about $1.1bn.
The sale process is RCom’s latest gambit in its struggle to avoid being forced into insolvency proceedings under India’s historic new bankruptcy code, having become unable to service debts of $7bn. Its default came amid a price war launched by new entrant Reliance Jio, controlled by Mr Ambani’s elder brother Mukesh.
The exit from telecoms of RCom — once India’s second-largest mobile operator and the flagship of Anil Ambani’s business empire — would mark the end of an era for the younger sibling, leaving him with a smaller group focused on infrastructure and financial services.
Over the past year, creditors China Development Bank and Ericsson have both started insolvency proceedings against RCom.
CDB withdrew its petition in December after the Ambani brothers agreed a telecoms infrastructure deal. According to a presentation to RCom bondholders earlier this year, the state-owned bank has forgiven loans worth at least $1.1bn in return for the rights to a $700m real estate project near Mumbai’s new airport.
Ericsson filed a separate insolvency action in May against RCom, whose restructuring has emerged as a high-profile test case of India’s new bankruptcy law. The petition by Ericsson, which said it was owed $150m, disrupted RCom’s first attempt to sell its remaining telecommunications assets, before being stayed in May after an appeal by RCom.
Ericsson recently reached a settlement with RCom, allowing it to proceed with the sale of its remaining telecoms assets. The sale is being run by Credit Suisse, with bids due by August 16.
I Squared, which paid $1.9bn for Hong Kong-based Hutchison Telecommunications’ fixed-line business last year, had been in pole position to buy the assets before Ericsson’s intervention, according to three people involved in the deal. “I Squared wants to take the Hutch assets and create a new India and China-focused data centre company,” one of the people said.
But the delay opened the door for the TPG-Blackstone-Varde consortium, which has offered to pay out high-yield bonds issued by RCom’s Indian data centres unit.
Richard Li’s PCCW and Sistema, a Russian conglomerate, have also previously expressed interest in buying some or all of RCom’s remaining telecoms business.
RCom last year made an abortive attempt to merge its mobile business with that of Aircel, another struggling operator. In December it announced the sale of most of its core mobile assets to Mukesh Ambani’s Reliance Jio, a deal which has been heavily delayed by Ericsson’s legal action. RCom says the Jio deal is now set to proceed after the supreme court gave its approval on August 3.
RCom, TPG, Blackstone, I Squared, Credit Suisse and CDB did not respond to requests for comment.