RCOM signs telecom tower sale with Brookfield for Rs 11,000 Cr

Reliance Communications (RCOM) today announced the signing of a non-binding term sheet with Brookfield Infrastructure Group in relation to the proposed acquisition of RCOM's nationwide tower assets and related infrastructure by Brookfield for Rs 11,000 crore.

Under the term sheet, the specified assets are intended to be transferred from Reliance Infratel (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 MSA, for its integrated telecommunications business.

RCOM will receive an upfront cash payment of Rs 11,000 crore for 51 per cent from the proposed transaction. According to industry sources, this is the largest-ever FDI coming to India in the infrastructure sector.

RCOM will also enjoy 49 per cent future economic upside from the towers business, based on certain conditions.

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. The combination of tower sale and Aircel deal will help in reducing debt by Rs 25,000 crore to reduce RCOM debt by around 60 per cent to Rs 17,000 crore.

After the tower deal, RCOM will retain 50 per cent stake in combined wireless business and 49 percent stake in towers business. RCOM will also retain 100 per cent of its highly profitable enterprise business, data centres, optic fibre, global submarine cables and GCX, etc.

RCOM is also planning to monetize its real estate to raise another Rs 5,000 crore, and reduce overall debt from Rs 17,000 crore to Rs 12,000 crore.