RCom lenders' meet today, stock up 32%

The stock price of Reliance Communications (RCom) shot up by over 32.14 per cent to close at Rs 17.10 on Wednesday, possibly triggered by a joint lenders’ forum meeting scheduled for Thursday. The forum is expected to discuss the bids it has received for sale of the company’s assets.

Buoyed by the stock movement, RCom’s market capitalisation touched Rs 4,558 crore.

The joint lenders, led by State Bank of India, need to recover a part of the over Rs 40,000 crore (which include interest) it has lent to the company. However, one of the lenders, China Development Bank (which had lent $1.3 billion), had recently moved the National Company Law Tribunal (NCLT) to launch insolvency proceeding against RCom. In a hearing on December 18, NCLT adjourned the insolvency petition filed earlier by China Development Bank and Ericsson to January 5. The assets which have been put on sale include towers, fibre (inter and intracity), real estate, spectrum, and international business, which include undersea cable, amongst others.

According to sources, Reliance Jio has been one of the key bidders and has shown interest in both fibre (they are one of the main bulk users) as well as spectrum. It is learnt that Jio, one of the main tenants, was also weighing the option to bid for the 43,000 towers. In spectrum, too, Jio has a comprehensive trading and sharing agreement with RCom across all the circles under which the Mukesh Ambani-led company is using its 850 megahertz (MHz) spectrum to offer 4G. Jio may be keen to buy out this spectrum in the asset sale, sources said.

There are, of course, other contenders in the game. Bharti Airtel has officially confirmed that it is looking at buying spectrum from RCom. Vodafone, too, has shown interest.

Besides spectrum in the 850 MHz band (in 21 circles), the company has airwaves in the 900 MHz band (in two circles) as well as the 2100 MHz band (in 13 circles). Most of the spectrum has a long tenure and expires in 2030s. The 850 MHz spectrum in eight circles (which it got from the merger with Sistema) is till 2033, while it expires between 2021 and 2035 in the other 13 circles. For the real estate play, the company is looking at co-development of its properties in Dhirubhai Ambani Knowledge City, or DAKC, near Mumbai, Delhi, and Chennai. For tower assets, apart from Jio, even Brookfield has shown interest. However, a senior executive of a leading tower company argued that buying the assets will make sense only if the acquirer has an understanding with RCom’s key tenant, Jio. “Many might not be comfortable with the dependence on only one tenant,” he said.

Assessments suggest the lenders will be able to garner anything between Rs 30,000 crore and Rs 40,000 crore.