Anil Ambani-promoted Reliance Communications is set to sell its tower business for $1.6 billion or Rs 11,000 crore.
The buyer is Brookfield Infrastructure Partners and its institutional partners.
“RCOM will receive an upfront cash payment of Rs 11,000 crore on completion of the tower transaction,” said Reliance Communications in a statement.
Reliance Communications’s Class B non-voting shares in the new tower company will provide 49 percent future economic upside in the towers business.
Reliance Communications expects significant future value creation from the B Class shares, based on growth in tenancies arising from increasing 4G rollout by all telecom operators and fast accelerating data consumption. Reliance Jio, Bharti Airtel, Idea Cellular and Vodafone are rolling out 4G services across India.
Reliance Communications and key milestones
# $1.6 billion telecom tower deal with Brookfield Infrastructure
# 50% stake in merged company with Aircel
# Acquisition of MTS India
# Spectrum trading and sharing deals with Reliance Jio for 4G footprint
Reliance Communications in a statement said the tower deal represents the largest ever investment by any overseas financial investor in the infrastructure sector in India.
Reliance Communications will spin off the telecom towers business into a new company. Brookfield Infrastructure will own 100 percent of the telecom tower company and manage the cellular tower business as an independent owner.
The tower company will be the second largest independent and operator-neutral towers company in India. Indus Towers is the largest telecom tower company in India.
Reliance Communications and Reliance Jio Infocomm, promoted by Anil Ambani’s brother Mukesh Ambani, will be long term tenants of the new tower company, along with other existing third party telecom operators.
Reliance Communications will utilize the cash payment of Rs 11,000 crore to reduce its debt.
The company says its wireless business with Aircel, and the monetization of the tower business, will reduce overall debt of Reliance Communications by Rs 31,000 crore or $4.6 billion, or nearly 70 percent of existing debt.
Reliance Communications will hold 50 percent stake in the new wireless company with Aircel and the 49 percent future economic upside in the towers business.
Reliance Communications aims to monetize these assets in the future to further substantially reduce its overall debt.
Ambit, SBI Capital Markets and UBS Securities India are acting as financial advisers and Herbert Smith Freehills and JSA Law are acting as legal advisers to RCOM for the telecom tower transaction.
editor@telecomlead.com
