Telecom network operator Reliance Communications has signed a non-binding term sheet with Brookfield Infrastructure Group to sell tower business for a cash payment of Rs 11,000 crore.
Reliance Communications, which recently announced a merger of its wireless business with Aircel, will become a tenant for the purpose of using the towers for its integrated telecom business.
Anil Ambani-promoted Reliance Communications will also enjoy 49 per cent future economic upside from the towers business, based on certain conditions. Brookfield Infrastructure is an infrastructure assets management company.
This is the largest-ever foreign direct investment coming into India in the infrastructure sector.
As per the telecom tower deal, Reliance Infratel will transfer telecom towers into a separate special purpose vehicle, to be owned by Brookfield. Reliance Communications will continue as an anchor tenant on the tower assets, under a long term master services agreement, for its integrated telecommunications business.
Reliance Communications and Brookfield expect growth in tenancies based on increasing 4G LTE offerings by all telecom operators, and the fast accelerating trends in data consumption, which are expected to contribute to significant growth in revenues and profitability for the towers business in the future.
Both the companies also see several opportunities for consolidation in the towers industry in India that will further enhance growth and value creation in the future.
Reliance Communications intends to utilize the proceeds of the proposed transaction solely to reduce its debt.
