India’s Supreme Court has cleared the partial sale of debt-laden Reliance Communications (RCom)’s wireless assets to Reliance Jio.
The sale will further expedite RCom’s withdrawal from India’s mobile market. Earlier this year, RCom reached an agreement for Reliance Jip to acquire its spectrum, fibre and real estate assets, and while approval for these has been granted, RCom has not been cleared to divest its tower holdings.
For this, it will need clearance from the National Company Law Tribunal (NCLT), as it does not directly own or control its towers – this is handled by its subsidiary, Reliance Infratel. Nonetheless, even selling some of its wireless assets will help RCom ease its $6.9 billion debt burden.
The approval will be a particular relief after the Supreme Court last month denied permission for the plan to proceed, instead deferring the hearing to 5th April. This refusal was due to an arbitration tribunal ruling that RCom must obtain permissions before the deal could move on, partly as the operator faced a legal challenge from Ericsson over an alleged $156 million in unpaid service fees.
RCom has previously stated that it intends to withdraw from India’s mobile market and adjust its focus towards enterprise clients; however, some industry watchers believe that the group could also divest its fixed assets and pull out of telecommunications altogether.