RCom to sell 51% stake in tower assets to Brookfield

By:
James Pearce
Published on:

Indian operator says it will use funds raised to pay down some of its $6.3bn debt

Reliance Communications (RCom) has agreed to sell a 51% stake in its tower assets to Canada’s Brookfield Infrastructure Group for 110bn rupees ($1.65bn).

The Indian operator will use the proceeds “solely” to deal with its $6.3 billion net debt, it said in a statement. Owner Anil Ambani said last month he aims to cut its debt by more than three-quarters within a year.

RCom will retain a 49% stake in the business, which will be transferred from Reliance Infratel on a going concern basis into a separate SPV which will be owned by Brookfield. The Indian operator will continue as an anchor tenant on the towers as part of a long-term master service agreement.

“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 said in a statement.

Reliance is in the process of merging its wireless business with Aircel, which together with the sale of its tower assets, will reduce its debt by around 60%. Aircel is the Indian arm of Malaysia’s Maxis Communications, and the merger will create a business with nearly 200 million customers.

RCom had previously struck a deal with a group TPG Capital Management to sell its tower assets, but that fell through earlier this year despite attempts to extend deadlines to push a deal through.