Reliance Communications (RCOM), India’s fourth-biggest cellular carrier by customer base, said on Friday it signed a non-binding term sheet with Brookfield Infrastructure Group to sell its tower assets in a deal that could fetch it an upfront Rs 11000 crore. Sources close to the company said RCOM will retain 49% stake in the tower business, a complete exit will considered in future. This money will be entirely used for reducing debt on the books of RCOM.
It would also get “49% future economic upside” from the tower business, based on certain conditions, the company, controlled by billionaire Anil Ambani, said in a statement. The statement also said that RCOM expects considerable value creation in the next couple of years, in view of likely significant growth in tenancies owing to spread of 4G networks.
RCOM’s debt currently stands over Rs 42000 crore. With the proposed merger of the airwave business with Aircel, Rs 14000 crore of this will be hived off to the new entity. The stake sale in the tower business will immediately reduce this debt by Rs 11000 crore. Another Rs 8000 crore will be garnered from hiving off the Indian fibre assets and land monetisation. So Rs 9000 crore will remain as debt.
“We have 49% stake with us in the tower business, which we will sell at a later stage. So the remaining debt will also be made good,” said a company executive who did not wish to be named.
Anil Ambani-led Reliance Group has for long been in the lookout to sell their tower business. This move will also reduce the Group’s consolidated debt that currently is at Rs 108000 crore.