Reliance Communications (RCom)

2019: Bankruptcy

In February, 2019 it became known that the company declared bankruptcy.

2018: "System" sold out the packet belonging to it for $60 million since the company is close to bankruptcy

In June, 2018 it became known that AFK "Sistema" completely sold out the stocks of the Indian telecommunication company Reliance Communications (RCom) owned by it. The Indian newspaper Economic Times reports about it. The Russian corporation owns 74% of the Indian Sistema Shyam Teleservices (SSTL) which had 10% of stocks of RCom.

Shares of RCom are traded on the Bombay stock exchange. Since the beginning of 2018 of SSTL consistently reduced a share in RCom. In March the share of SSTL was reduced to 7%, in April up to 5%, in May up to 4.5%.

The press service of AFK "Sistema" confirmed to CNews sale of the share in RCom^[1]. Transactions were performed in public market and do not disclose their total amount of corporations.

For June 20, 2018 capitalization of RCom makes 41 billion rupees ($605 million). Respectively, the market value of the sold SSTL of a packet is 4.1 billion rupees ($60 million), and the cost of a share of AFK "Sistema" in SSTL of 3 billion rupees ($45 million).

The source of The Economic Times notes that RCom is close to bankruptcy in this connection AFK "Sistema" decided to sell a share in the company. Besides, in the Indian telecommunication market strong competition there are also fast processes of consolidation.

In the nearest future the Supreme Court of India should put the end to a dispute of SSTL with the authorities of the country. SSTL and RCom want to integrate the frequency range which is available for them in the range of 800 MHz to be used it for LTE technology.

The department of telecommunications of India demanded from SSTL to pay in addition $600 million for such opportunity. The company addressed to Telecommunication tribunal of India which supported SSTL and cancelled this requirement. But trials on the matter continue.

If case ends with a victory of SSTL, then RCom, according to earlier concluded between the parties the agreement, will have to pay in addition to the Russian company $300 million.

By the beginning of 2012 AFK "Sistema" invested in SSTL $2.5 billion – taking into account payments for frequencies, including the share redeemed by Rosimushchestvo. In 2013 the company paid for the frequency of $600 million, at the same time earlier effected payment in 300 million was considered.

After that AFK "Sistema" redeemed the preferred shares SSTL for $1.5 billion Besides, the corporation agreed to pay to Rosimushchestvo $750 million for its share in the Indian company.

So all AFK "Sistema" invested about $4.5 billion in the telecommunication sector of India. It was succeeded to return only about 1% of this amount. However, if RCom pays to SSTL the mentioned $300 million, the corporation will be able to receive 6% of the investments back. The press service of corporation did not begin to comment on these calculations.

2017: RCom sold cellular business to Reliance Jio Infocomm Internet service provider

In 2017 RCom faced a problem of a heavy debt which on the end of the year made 420 billion rupees ($6.4 billion). As a result the main owner of RCom Anil Ambani made the decision to sell cellular business of the company to the Reliance Jio Infocomm Internet service provider belonging to his brother Mukesh Ambani.

Transaction amount was 240 billion rupees or $3.75 billion. After that RComm had submarine main cables, data centers and business on service of corporate subscribers.

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