Mumbai: Two subsidiaries of Reliance Jio Infocomm Ltd plan to raise ₹2,000 crore each through rights issues, two officials aware of the development said. The two subsidiaries—Jio Internet Distribution Holdings Pvt. Ltd and Jio Television Distribution Holdings Pvt. Ltd—are among six subsidiaries formed by Reliance Jio last year to segregate its telecom and content businesses.
As part of its telecom business, the company has decided to demerge its fibre and tower assets into two separate units for more flexibility in leasing out the assets.
“Both companies are issuing 1 million optionally convertible preference shares to raise ₹2,000 crore each on rights basis. Dividend rate is fixed at 6%," said one of the two officials mentioned above, both of whom spoke under condition of anonymity.
“The funds are being raised for general corporate purpose and also to meet possible future investment needs," the other official said.
Reliance Jio did not reply to an email query sent on Monday.
In 2018, Reliance Jio had decided to monetize its fibre and tower assets through the infrastructure investment trust (InvIT) route to pare debt. This would help it become an asset-light digital services company and bring down liabilities.
InvIT enables developers of infrastructure assets to monetize them by pooling multiple projects under a single entity or a trust structure. They are instruments structured as funds with a very long tenure, or open-end structure. InvITs pool small sums of money from multiple investors for investing in assets that ensure cash flow over a period of time. Investors receive part of the cash flow back in the form of dividend.
According to an official aware of the discussions, Canada-based Brookfield Asset Management Inc. is in talks with Reliance Industries Ltd (RIL) to acquire a controlling stake in its telecom assets.
“Brookfield has been looking at acquiring a telecom tower business for a long time. It is like an annuity business. Besides, the telecom market is good. In RIL or Jio, Brookfield sees a great anchor tenant," said a third official, also requesting anonymity.
“A deal with Brookfield is likely in a few months as RIL is still completing the demerger process. The deal could be as big as $15 billion for both towers and fibre," said the official.