Anil Ambani-promoted Reliance Communications has agreed to sell its tower assets to Brookfield Asset Management. RCOM will receive an upfront cash payment of Rs. 11,000 crore from the proposed transaction.
It has signed a non-binding Term Sheet with Brookfield Infrastructure Group in relation to RCOM’s nationwide tower assets and related infrastructure.
Under the Term Sheet, the specified assets are intended to be transferred from Reliance Infratel Ltd. (RITL) on a going concern basis into a separate SPV, to be owned by Brookfield.
RCOM will continue as an anchor tenant on the tower assets, under a long term agreement, for its integrated telecommunications business.
RCOM will also enjoy 49% future economic upside from the towers business, based on certain conditions, the company said.
The deal has come ahead of the merger of the company with Aircel Cellular. The sale and monetization of the tower assets was seen as a pre-requisite for the successful merger of the company with Maxis-owned Aircel.
The sale transaction will bring in much-needed cash to the balance sheet of the company and help reduce its high levels of debt.
RCOM and Brookfield expect considerable growth in tenancies based on increasing 4G 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.
RCOM and Brookfield also see several opportunities for consolidation in the towers industry in India that will further enhance growth and value creation in the future. RCOM intends to utilize the proceeds of the proposed transaction solely to reduce its debt.