Reliance Communications, the telecom company controlled by billionaire Anil Ambani, has signed binding agreements with Brookfield Infrastructure Partners and its institutional partners for the sale of its tower business.
RCom and Reliance Jio will continue as major longoterm tenants of the new tower company, along with other existing third-party telecom operators.
RCom will receive an upfront cash payment of Rs 11,000 crore ($1.6 billion) on completion of this transaction. The transaction is the largest ever investment by any overseas financial investor in the infrastructure sector in India, the company said in a statement.
Ambit, SBI Capital Markets and UBS Securities India are acting as financial advisers and HerbertSmithFreehills and JSA Law are acting as legal advisers to RCom for the transaction.
RCom's telecom towers will be demerged into a new firm that will be 100 per cent owned and independently managed by Brookfield Infrastructure, thereby, creating the second largest independent and operator-neutral towers company in India.
RCom will enjoy certain information and other rights, but will not be involved directly or indirectly in the management and operation of the new company.
RCom will use the upfront cash payment of Rs 11,000 crore solely to reduce its debt. The already announced combination of RCom's wireless business with Aircel, and the monetisation of the tower business, will together reduce its overall debt by Rs. 31,000 crore or nearly 70 per cent of existing debt.
RCom will continue to hold 50 per cent stake in the wireless business combination with Aircel and the 49 per cent future economic upside in the towers business, and will monetise these valuable assets at an appropriate time in the future to further substantially reduce its overall debt.