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Reliance Communication signs binding pact with Brookfield for $1.6bn tower stake sale


2 Aug 2015
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RCOM and Reliance Jio will continue as major long term tenants of the new Tower company, along with other existing third party telecom operatorsm, said the statement.

MUMBAI: Anil Ambani led Reliance Communications on Wednesday signed a deal with Brookfield Group to sell a 51% stake in the telecom company’s tower unit, Reliance Infratel, for Rs 11,000 crore.

The all cash deal will be used to reduce the firm's debt. RCom's previously announced wireless business merger with Aircel and the latest deal with Brookfield infrastructure will together reduce the company's overall debt by Rs. 31,000 crore.

RCom’s telecom towers will be demerged into a separate new company that will be 100% owned and independently managed by Brookfield Infrastructure. This will make the new firm the second largest independent and operator-neutral towers company in India after Indus Towers.

ET reported this deal on Wednesday. RCom is selling the assets as part of its efforts to reduce debt, which on a net basis was Rs 42,071 crore at the end of June.

According to the statement, RCom will also receive Class B non-voting shares in the new tower company, providing 49% future economic upside in the towers business based on certain conditions, which means that the telco will enjoy certain information and other rights, but will not be involved directly or indirectly in the management and operations of the new company.

The firm 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’, as per the official statement.

RCom and Reliance Jio will continue as major long term tenants of the new tower company, along with other existing third party telecom operators, said the statement.

The transaction will now be subjected to approvals by shareholders, regulator and lenders.

Reliance Infratel is 96%-owned by RCom. The remaining 4% is held by institutional investors such as George Soros' Quantum, NSR Partners, Galleon, HSBC Daisy Investment (Mauritius), Drawbridge Towers and and Investment Partners B (Mauritius) — this stake will be acquired by Brookfield.

The deal with Brookfield is the second attempt made by RCom to sell its tower business. Last December, it announced that Sanjiv Ahuja-led Tillman Global Holdings, backed by private equity player TPG, had signed a non-binding pact to buy the assets for around Rs 21,500 crore. But TPG pulled out over valuation differences, and Tillman failed to find a suitable financier, bringing Brookfield into the picture, ET reported on Wednesday.

Brookfield: Reliance Communication signs binding pact with Brookfield for http://m.economictimes.com/news/company/corporate-trends/reliance-communication-signs-binding-pact-with-brookfield-for-1-6-bn-tower-stake-sale/articleshow/56099442.cms.6 bn tower stake sale - The Economic Times
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