After stake sales in digital assets, RIL shifts focus to fibre biz
Citigroup, Moelis and Co. and ICICI Securities have been hired by Reliance as investment bankers for the proposed deal with Qatar Investment Authority
Sovereign fund Qatar Investment Authority (QIA) is in advanced talks with Reliance Industries Ltd to invest around $1.5 billion (about ₹11,200 crore) in an infrastructure investment trust (InvIT) that holds the company’s fibre-optic assets, two people aware of the development said on condition of anonymity.
After raising more than $20 billion through stake sales in the digital assets unit, Jio Platforms Ltd, the Mukesh Ambani-led Reliance is now looking to monetize its fibre assets held by Jio Digital Fibre Pvt. Ltd.
“Fibre network business monetization falls exactly in line with RIL’s original plan to make Jio become an asset-light digital services company and save significantly on costs as the group is gearing up to offer affordable 5G services. It has an immense revenue generation potential," said one of the two people cited above, requesting anonymity.
“Qatar Investment may invest $1.5-2 billion in RIL’s fibre business."
Citigroup Global Markets, Moelis and Co. and ICICI Securities Ltd have been hired by Reliance as investment bankers for the proposed deal with Qatar Investment Authority.
Last year, Reliance received a ₹25,215 crore investment in an InvIT holding its telecom tower assets from a consortium led by Canada’s Brookfield Asset Management.
Spokespeople at Reliance, Moelis and ICICI Securities declined to comment. Emails sent to Qatar Investment Authority and Citigroup did not elicit any response.
Jio Digital Fibre has a 700,000 km network of fibre-optic cables in India and plans to expand it to 1.1 million km.
In March 2019, Reliance’s telecom subsidiary Reliance Jio Infocomm demerged its fibre and tower businesses into Jio Digital Fibre Pvt. Ltd and Reliance Jio Infratel Pvt. Ltd.
This has helped Reliance take these assets off its balance sheet. The two entities now operate independently, with Reliance Jio Infocomm as the sponsor.
According to the current plan, Reliance Jio Infocomm will continue as the sponsor of the InvIT and retain a minimum 15% stake, while the remaining 85% would be sold to global investors, including Qatar Investment Authority.
Qatar’s investment in Jio Fibre follows a recent announcement by Indian tax authorities to exempt tax for sovereign funds investing in India’s infrastructure sector.
In its FY20 annual report, RIL said Jio’s 5G-ready network and extensive fibre assets would play a key role in the development of the 5G ecosystem in India, based on market dynamics.
“Jio’s extensive intracity fibre network, last-mile execution, seamless customer experience, along with attractive bundling of digital content and smart home IoT (internet of things) solutions, would be key differentiators," the annual report said.
Jio has plans to offer state-of-the-art wireline services, which are all 5G ready. Currently, Jio Fiber has monthly plans ranging from ₹699 to ₹8,499.