Anil Ambani, Chairman of Reliance Communications strategized a plan to help cut down the company’s debts by a drastic margin. The leading corporate honcho decided to sell stakes in the tower unit to US based company named Brookfield as a part of series of deals that will witness the emergence of Aircel-RCOM’s merged entity. The merged entity is also speculated to formulate India’s fourth biggest telecom company."We set an aggressive goal for RCom, to reduce debt from Rs 42,000 crore to zero. With the proposed Aircel transaction and the Brookfield towers deal, we will already be at around Rs 15,000 crore debt, down by over 70%,"Anil Ambani said in a conversation. "Had we sold 100% of the towers business, our debt would have been near zero —our target." The outstanding interest liability that remains will be much more easily manageable.
RCOM, few years back, was falling short of expectations when Anil Ambani decided to adopt his father’s strategy of finding an opportunity in adversity leading to a two-prolonged strategy. One option in hand was of consolidation whereas the other option was to sign an agreement with Mukesh Ambani’s Reliance Jio on spectrum sharing.
"We at RCom recognised the opportunity to embark on a strategic partnership with a major player like Jio," Ambani said. "We have now implemented a comprehensive agreement with Jio to trade and share our gold standard 850 MHz spectrum, and also share infrastructure of towers and fibre."
Anil Ambani believes that the agreement with Jio will lead to savings while gaining a technological edge.
He also said, "In a capital-intensive industry like telecom, this has converted our business model into an asset-light model for future growth, and saved the company billions of dollars, and given us access to a full next-generation 4G network on a pan-India basis."
Reference Link: http://indiatoday.intoday.in/story/ambani-jio-reliance-airtel-telecom-4g/1/759330.html