Reliance Jio will acquire all the assets without any previous liabilities attached to them. The company had announced its exit from RBI's strategic debt restructuring (SDR) framework, with zero equity conversion and zero loan write-offs for lenders and bond holders.
The company will reduce debt by monetizing its wireless business and selling land parcels at Dhirubhai Ambani Knowledge City (DAKC), Chairman Anil Ambani said in a press conference. The company also announced the on boarding of a new strategic investor, but the company did not specifically name the new investor.
"Some of the assets are quite valuable for Reliance Jio", Fitch Ratings Director Nitin Soni said. Jio will also pay the spectrum installments due to the government.
The transaction is expected to close in a phased manner in January-March 2018.
Soni thinks Reliance Jio must be getting the assets for a lower valuation.
A few months ago, Anil Ambani had blamed Reliance Jio for the troubles in India's telecom sector.
Reliance Communications did not reveal the size of the deal. And if Reliance Jio stays aggressive in 2018-it has the deep pockets to do so-it will strain the financials of all players, including Jio, even more.
Until now, barring Jio, nearly every other player in the telecom sector has been in talks with other players to join hands. The company's recent struggles to stay afloat are in sharp contrast to its heyday in 2010, when it was India's second largest mobile operator.
Mukesh Ambani had entered the telecom sector after ending a "non-compete" agreement with his warring brother in 2010.
"Hastened consolidation benefited larger telcos. large telcos have benefited from the acquisition of spectrum and telecom assets at lucrative prices, which in turn has strengthened their business model", the ratings agency said. The estranged siblings had reached a settlement in June 2005, after almost three years of a succession war, with the help of family matriarch Kokilaben Ambani. While Bharti Airtel Ltd-the nation's biggest mobile-phone operator-has acquired the Indian unit of Norwegian firm Telenor and the consumer telecom business of Tata Teleservices Ltd, Idea Cellular Ltd and the local arm of Vodafone Group Plc have made a decision to merge.