RIL to restructure Jio to make it virtually debt-free by March 2020
Reliance Industries (RIL) has designed a structure to make Reliance Jio (RJIL) debt-free. The announcement was made on Friday. The move is said to be a strategy to make way for a likely listing of its telecom business. Jio is a 4G-based telecom operator and with the restructuring of Jio with its over 35.5 crore subscribers will largely have about Rs 40,000 crore of spectrum-related debt on books.
As part of the move, the company will transfer its telecom business and other digital initiatives to a wholly-owned subsidiary and the infusion of Rs 1.08 lakh crore in it. This investment will be in the form of rights issue of optionally convertible preference shares (OCPS).
The subsidiary will serve as a universal platform for all the digital businesses including Jio and thus, bring the company’s total investment in the digital business to Rs 1.73 lakh crore. This will make Jio almost net debt-free by March 31, 2020, but except for spectrum-related liabilities.
A statement released by the company said that the restructuring will back monetisation opportunities that will accrue to shareholders effectively and there will be no impact on Reliance’s overall debt position.
Reliance Industries has a consolidated sale of Rs 622,809 crore and a net profit of Rs 39,588 crore as of March 2019.