At ₹9,500 crore, Airtel’s is the highest upfront offer for RCom assets

Bharti Airtel Ltd has offered the highest upfront cash settlement among four bidders for Reliance Communications Ltd’s assets, which are currently under insolvency proceedings, said two people directly aware of the matter.

Bharti Airtel has offered about ₹9,500 crore to acquire the assets that include spectrum, telecom towers, fibre, data centres and real estate, the people cited above said on condition of anonymity. Upfront cash is often a key factor that creditors evaluate while deciding on a winning bidder.

“The conditions put forth by Airtel in their bid could reduce the viability of their bid,” one of the two people said, without elaborating. Mint could not immediately ascertain the nature of those conditions.

Reliance Jio, which had last year agreed to buy the assets of Reliance Communications, including its spectrum, did not bid for the spectrum and real estate assets this time.

“Reliance Jio Infocomm has offered ₹3,600 crore as upfront cash payment, but has not placed a bid on RCom’s spectrum assets or the company’s real estate,” the person cited earlier said. “The committee of creditors would like to sell all assets in a single transaction, and not separately.”

The person said New Delhi-based UV Asset Reconstruction Co. Ltd has offered a bid of ₹12,760 crore, which will be staggered over several years. This bid has a net present value of roughly ₹9,000 crore. A fourth bidder, US-based private equity fund Varde Partners, is also offering staggered payments with little upfront cash for the assets on the block. The value of Varde’s offer could not be ascertained immediately.

Emailed queries to Bharti Airtel, Reliance Jio, UV Asset Reconstruction and insolvency resolution professional Anish Niranjan Nanavaty of Deloitte India, who is managing the sale process, remained unanswered. A spokesperson for Varde Partners declined to comment.

The last day for submitting bids was 25 November, which was an extension of 10 days from an earlier deadline.

Meanwhile, a Bharti Airtel spokesperson told The Economic Times that a conditional bid was submitted primarily for the spectrum, which is a precious asset.

“The bid conditions include that the overall consideration will primarily be by way of the deferred spectrum payables to the government being passed on to us on terms and schedules applicable to such deferred payments,’’ the spokesperson told the newspaper on 14 November.

“Thanks to the new structure of the telecom market, spectrum is not as scarce a resource as it was, say, 10 years ago,” said Mahesh Uppal, telecom regulatory expert and director of Com First (India) Pvt. Ltd, explaining the different approaches by telecom operators. “This could explain Reliance Jio’s reluctance to take on RCom’s spectrum, especially when it comes encumbered. At the same time, Airtel might find some of RCom’s spectrum attractive, if the specific frequencies are of immediate commercial interest.”

In December, the department of telecommunications (DoT) did not approve a spectrum trading deal between Reliance Communications and Reliance Jio, as the proposed deal did not conform to the department’s spectrum trading guidelines. Jio had sought assurances from the government that it would not be held liable for past dues on RCom’s airwaves. The deal fell through as DoT did not accept the conditions. RCom owes DoT ₹28,837 crore in past spectrum dues.

Reliance Jio had last year also agreed to acquire 43,000 telecom towers and 178,000 route kilometres of optic fibre network. The deal failed to secure the requisite clearance from lenders and DoT.

China Development Bank, Life Insurance Corporation of India, State Bank of India, Exim Bank of China and Bank of Baroda are among 41 creditors to the bankrupt telecom company.

According to information available on the company’s website, it owed financial creditors ₹49,193.46 crore. RCom’s assets are housed under three companies—RCom, Reliance Telecom and Reliance Infratel. They owe financial creditors ₹24,306.27 crore and ₹12,687.65 crore, respectively. Reliance Communications thus owes debtors ₹86,187.58 crore at a consolidated level. This is besides the ₹28,837 crore it owes DoT in spectrum dues and other charges as well as the amounts it has to pay its operational creditors, Mint reported on Tuesday.