MUMBAI: Debt-laden Reliance Communications has signed a deal to sell its wireless assets to Reliance Jio Infocomm for nearly 240 billion rupees ($3.75 billion), two sources familiar with the matter told Reuters on Friday.

The two companies had announced late on Thursday that Reliance Communications, backed by businessman Anil Ambani, would sell all its spectrum, tower, fibre optic and other telecom infrastructure assets to Jio, which is owned by Reliance Industries and is controlled by Anil Ambani’s elder brother Mukesh Ambani, India’s richest person.

The firms did not give the value of the deal. Jio and Reliance Communications, or RCom as the company is known as, did not respond to messages seeking comment on the value of the deal.

The sale, if finalised, would mark a big step in RCom’s quest to cut down debt, which had sent its shares to record lows earlier this year and led creditors such as China Development Bank (CDB) to start insolvency proceedings over missed payments. RCom had a net debt of 450 billion rupees at the end of October, putting it among India’s most indebted companies.

CDB told Reuters late on Thursday it is in talks with RCom.

RCom shares rose as much as 29.9 per cent on Friday while Reliance Industries rose as much as 0.9 per cent.

The sale would also mark the return of the telecom operations back into the fold of Reliance Industries, which forayed into telecoms in 2002, spearheaded by the elder Ambani, under the name of Reliance Infocomm Ltd.

A feud between the two brothers in 2005 led to the split of Reliance Industries, with Mukesh Ambani keeping the cash cow oil and gas business and Anil Ambani walking away with telecoms and power.

But Mukesh Ambani has re-entered the telecoms space with the launch of Jio in September 2016, upending the sector with cut-price data and free voice service and pushing RCom into a debt spiral.

Analysts said the deal would serve both brothers, allowing Jio to expand its footprint in India’s cutthroat telecom sector, while allowing RCom to pare debt.

Reuters