Debt-burdened Reliance Communications has entered into a binding memorandum of understanding to sell its subsidiary Reliance Big TV Ltd (RBTV), which was offering direct to home (DTH) services across the country, to privately owned Veecon Media and Television for an undisclosed amount.
RBTV's DTH license was to expire at end of this month and the Anil Ambani-owned RCom had recently said that it had no plans to renew it as it was a non-core business. The company, which has a debt of Rs 45000 crore, has offered a new restructuring package to lenders, which will see the lenders converting Rs 7000 crore worth debt into majority 51 per cent equity stake.
As per the deal to sell RBTV, Veecon Media will acquire the entire shareholding along with business on "as is where is" basis, including trade liabilities and contingent liabilities.
The buyer will also renew the DTH license of Big TV with the submission of the required bank guarantees with the ministry of information and broadcasting.
"The transaction ensures that all existing 1.2 million customers of RBTV shall continue to enjoy uninterrupted services. It also ensures the continuity of employment for about 500 employees of RBTV," RCom said in a statement.
The deal is a part of the strategic debt restructuring exercise announced by RCom, where it is shutting down the 2G wireless business by end of November and will focus on the B2B business, which includes enterprise, internet data centre and global submarine cable network. It will also continue to offer 4G services through the network sharing deal with Reliance Jio. The company was looking to merge its telecom business with that of rival Aircel, however that deal fell through. RCom suffered another setback on Monday as it appears that, the plans to sell its stake in the telecom tower assets to Canada's Brookfield Infrastructure, is also likely off.
On November 3, Brookfield Infrastructure Partners informed the US Securities and Exchange Commission (SEC) that its proposed investment in RCom's towers may not proceed due to the collapse of the merger between RCom and Aircel.
“Our agreement to acquire the previously announced $200 million investment in a portfolio of over 40,000 towers from Reliance Telecom was conditional on, among other standard conditions, the merger of Reliance Communications with Aircel. The merger will not proceed and therefore our transaction as previously announced will not proceed either,” Brookfield said.
RCom was expecting around Rs 11000 crore from the sale of stakes in tower assets. Brookfield said it continues to monitor the evolving situation to determine if revised terms could be agreed upon.
RCom has also announced plans to monetise prime real estate and its spectrum to pay back part of the debt.
RCom shares tumbled 6.2 per cent on Monday to close at Rs 15.85 on the BSE as the news of Brookfield's decision broke. The DTH business sale was announced after market hours.
