Reliance Communications (RCOM) and its affiliates have signed binding definitive agreements with Reliance Jio Infocomm Limited (RJIL) for sale of wireless spectrum, towers, fibre assets and media convergence nodes. These assets, reportedly worth over Rs 250 billion, are strategic in nature and are expected to contribute significantly to RJIL’s wireless, fibre and enterprise businesses. Meanwhile, RCOM will utilise proceeds of the cash deal purely for pre-payment of debt obligations to its lenders.

The company expects transactions to close in a phased manner between January and March 2018.

As per the agreement, RCOM will sell 122.4 MHz of 4G Spectrum in the 800/900/1800/2100 MHz bands, over 43,000 towers, approximately 1,78,000 RKM of fibre with pan India footprint and 248 media convergence nodes, covering ~5 million sq.ft. space used for hosting telecom infrastructure.

The deal consideration comprises of cash payment. Also, as per the deal, RCOM’s liability of deferred spectrum payments to Department of Telecommunications will now be transferred to RJIL.

The announcement follows an asset monetisation process for RCOM assets mandated by its lenders. SBI Capital Markets Limited was appointed to run the process. Jio emerged as the successful bidder in the two-stage bidding process. RJIL was being advised by Goldman Sachs, Citigroup Global Markets, JM Financial Private Limited, Davis Polk & Wardwell LLP, Cyril Amarchand Mangaldas, Khaitan & Co and Ernst & Young on this transaction.

Going forward, RCOM is looking to transform from a business-to-consumer (B2C) into a business-to-business (B2B) entity. This entity will develop submarine cable systems that will use the latest sub-sea cable technology to meet growing cloud infrastructure and data capacity demand from global enterprises and over-the-top, or OTT, service providers.

The new entity is expected to be valued at Rs 150 billion. The business will be based on a capex-light model and will generate sustainable cash flows, with 50 per cent of revenue and 60 per cent of operating profits coming from outside of India.