SBI Caps has finalised a detailed evaluation of the bids of the four companies that have offered to buy Anil Ambani’s telecom business.
The report will be presented to the committee of creditors (CoC) on Friday to take a final call on the potential best offers.
RCom, Reliance Telecom, and Reliance Infratel are up for sale as part of the Insolvency and Bankruptcy Code process as going concerns.
The committee of creditors opened the financial bids on Monday, which was also the last date for putting in bids.
The bidders — Bharti Airtel, Reliance Industries, Varde Partners, and Delhi-based UV Asset Reconstruction Company Ltd (UVARCL) — have conditions rather than just an upfront financial offer, and this makes the evaluation more complex, say sources in the know.
Sources say Bharti Airtel has made an offer of around Rs 9,500 crore. The offer includes buying the two companies that house the spectrum (Reliance Communications and Reliance Telecom), but has offered to make staggered payouts for it. It means the company will fork out the money based on the schedule of paying deferred spectrum, to be done in 16 years. According to sources, it might have also bid for the tower assets in Reliance Infratel though another company.
Even U V Asset Reconstruction Company has offered over Rs 12,700 crore but this is also based on a staggered payment plan that includes running some of the businesses in the company and also sales of assets. It is not clear whether the company has bid for all the three companies or not.
UVARCL, which is not listed, had earlier bought Aircel as a going concern for an upfront payment of around Rs 150 crore (it would also pay the creditors from the proceeds of running the SMS business) and had agreed to run its smaller businesses while the rest of the assets would be sold and the proceeds given to banks.
A banking source confirmed it had put in a high bid. “It is in a position of strength since lenders recently approved its proposal to take over Aircel,” the source pointed out.
However, it is not clear as to whether they will be partnering in their business with a telco which requires the spectrum and the towers or with an infrastructure player.
Mukesh Ambani’s Reliance Industries is believed to have put in a bid for Rs 3,600 crore but that is primarily for Reliance Infratel. Experts say in accordance with the regulation, a non-listed entity (Reliance Jio) has to merge with the listed entity (RCom).
However, as Jio is planning an IPO, they say it is not possible. However, there is no such restriction between two unlisted companies merging.
Varde Partners, according to sources, has offered to invest in RCom, turn it around, and later monetise the assets and pay back the lenders. The committee of creditors on Friday is expected to discuss the SBI evaluation on the financial bids.
Bharti Airtel, when contacted, declined to comment. And emails to Reliance Jio, Varde Partners, and UVARCL did not elicit any response.
Interim Resolution Professional Anish Nananvaty had invited prospective companies to make bids for Anil Ambani’s companies as going concerns, which do not just have valuable spectrum and a fibre network but also real estate and an enterprise business, as a way of recovering over Rs 33,000 crore of debt of secured creditors. Jio has been using 58 MHz of RCom spectrum in the 800 MHz band across 21 circles through a spectrum-sharing agreement signed.
This spectrum is crucial for 4G services. The licence for the spectrum ends in 2021. It is also the sole tenant of its towers after RCom closed down operations. RCom has over 122 MHz of spectrum.
Reliance Jio last year signed an agreement to buy RCom’s assets including 43,000 telecom towers, 178,000 km of fibre network across the country, and valuable spectrum, for around Rs 25,000 crore. But the deal did not fructify because the Department of Telecommunications insisted that Jio’s or RCom’s promoters give an undertaking that they would be responsible for paying the dues of the past. Jio refused to give an undertaking. Even the creditors could not come to a consensus on whether to clear the asset sale. Consequently, Reliance Communications went to the National Company Law Tribunal.
Even before this deal, RCom in 2017 was looking at selling 51 per cent of its tower business for Rs 11,000 crore to Brookfield, valuing the assets at more than Rs 22,000 crore. However, most analysts say the current sale will be at a substantial discount to what Reliance Jio or Brookfield was willing to pay.―Business Standard