Nearly six years after Reliance Communications (RCom) put its tower assets on the block and a failed attempt at an initial public offering (IPO), the telecom major has succeeded in finding a buyer.
On Friday, RCom agreed to sell 51 per cent of its tower unit Reliance Infratel to global alternative asset manager Brookfield Infrastructure Group for ₹11,000 crore in cash. RCom, the company controlled by billionaire Anil Ambani, will hold the remaining 49 per cent stake, which it intends to monetise later.
The tower deal will considerably reduce Ambani’s telecom debt. RCom had recently announced a plan to combine its wireless business with Aircel. These two transactions put together will reduce RCom’s debt from ₹42,000 crore to ₹17,000 crore. The company is now looking to monetise its real estate to raise another ₹5,000 crore. Shares in RCom ended up 2.57 per cent at ₹47.90 on the BSE.
Following the deal, RCom will continue as an anchor tenant on the tower assets under a master service agreement. Aircel and MTS, which will soon merge with RCom will also be tenants. Reliance Jio also has an agreement to use these tower assets.
“The firms also see several opportunities for consolidation across the tower sector in India to further ‘enhance growth and create value’,” RCom said in a statement.
Over the past six years, RCom has been looking to sell its entire stake in the tower unit and had held talks with many companies, including Mumbai-based GTL Infrastructure Ltd. In 2010, RCom filed for an IPO to raise up to ₹5,000 crore. But the plans had to be dropped.
Last year, a consortium led by TPG Capital Management LP initiated discussions. However, the deal did not go through due to differences on valuation. While Ambani was looking for an enterprise value of over ₹20,000 crore, the bidders were not offering more than ₹15,000 crore. Now with the three-way merger between RCom, MTS and Aircel, the assets may have received higher valuation.
India’s telecom tower sector is going through a consolidation. In October last year, American Tower Corporation bought 51 per cent of Viom Networks for ₹7,600 crore.