Re­ward­ing Haircut

Business Today - - THE BUZZ - – Manu Kaushik

RE­LIANCE COM­MU­NI­CA­TION is rac­ing against time to con­clude the deal with Re­liance Jio to sell its wire­less busi­ness, tow­ers, fi­bre and me­dia nodes, for about ` 18,000 crore. Jio is ex­pected to take on over ` 7,000 crore of RCom’s de­ferred spec­trum li­a­bil­ity debt. Af­ter the Jio deal, RCom will sell its re­main­ing 66 units of spec­trum (val­ued at around ` 3,700 crore), and is likely to make an­other ` 10,000 crore by sell­ing real es­tate. Ef­fec­tively RCom will re­duce its cur­rent ` 46,000 crore debt to ` 7,300 crore of debt on pa­per; The es­ti­mated net worth of RCom’s re­main­ing busi­ness is close to ` 7,000 crore.

Last year RCom’s debt-struc­tur­ing deal with lenders in­volved banks con­vert­ing ` 7,000 crore worth of debt into 51 per cent eq­uity in RCom. Though this would have left RCom’s books with lower debt, - ` 4,000 crore – lenders are def­i­nitely bet­ter off with this ap­proach. At least they don’t have to pay ` 7,000 crore for 51 per cent of a busi­ness that is val­ued at only

` 7,000 crore.

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