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Asset manager Brookfield takes majority stake in Reliance Infratel; Indian telco will use proceeds to pay down debt.
Reliance Communications on Friday agreed to sell a 51% stake in its towers business to asset manager Brookfield for 110 billion rupees (€1.5 billion).
Under the non-binding deal, the stake in Reliance Infratel will be transferred into a separate special purpose vehicle (SPV), to be owned by Brookfield.
The remaining 49% will be held by Rcom, which will continue to be an anchor tenant on the tower assets under a long-term master service agreement (MSA). The proceeds from the sale will go towards paying down the Indian telco’s debt.
"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.
Friday’s deal marks the second time Rcom has agreed to offload Reliance Infratel within the last 12 months.
In December 2015, Rcom entered into exclusive talks to sell the business to investment firms Tillman Capital and TPG Asia.
However, that deal fell apart in January amid reports that TPG’s valuation of Infratel fell below Rcom’s, prompting Tillman to try, unsuccessfully, to find a new partner.
Rcom will hope that history does not repeat itself.
Friday’s deal is subject to customary approvals, "accordingly, there can be no certainty that a transaction will result," Rcom said.
