Reliance Industries announced plans to separate its telecom business Reliance Jio Infocomm into a new company to develop digital services. The creation of the new subsidiary will also lead to a restructuring of debt generated from growing Jio.
Jio has completed much of its network build-out and its towers and passive fibre infrastructure were separated already in March, to Infrastructure Investment Trusts. The new subsidiary will acquire all of Reliance's equity of INR 650 billion in Jio. In addition, Reliance will take over INR 1.08 trillion of Jio's debt. Jio will pay for the debt transfer by issuing new optionally convertible shares to its new parent company, the subsidiary of Reliance Industries.
As a result of the transactions, Jio will become "virtually net debt free" by 31 March 2020, excluding its spectrum obligations, the company said. This will free it up to invest more in its digital platforms and new ventures as well as make it an attractive investment proposition for both strategic and financial investors, Reliance said. The company added it's already received "strong interest" from potential partners.
