Anil Ambani, Chairman, Reliance Group executed a strategized plan to reduce the debt that remained outstanding in Reliance Communication’s books. The telco giant’s leader managed to bring down the debt by selling stakes in the tower unit to US based company named Brookfield as a part of series of deals which also includes the merger between Aircel and RCOM. The newly created entity is speculated to form 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.
Years back when Reliance Group was falling short on expectations and was in dire state of immediate planning and action, Anil Ambani applied his father Dhirubhai Ambani’s strategy of finding opportunity in adversity leading to a two-prolonged strategy. The option at that time was either to consolidate or to enter into 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."
He added, "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."
Anil Ambani believes that the agreement with Jio will lead to savings while gaining a technological edge.
Reaference link: http://economictimes.indiatimes.com/news/company/corporate-trends/deal-with-jio-will-help-rcom-gain-technological-edge-anil-ambani/articleshow/54927029.cms