Source: News Bharati English15 Oct 2016 11:30:12
Mumbai, October 15, 2016: Reliance Communications Ltd. (RCOM) announced a non-binding Term Sheet with Brookfield Infrastructure Group with regards to the proposed acquisition of RCOM’s nationwide tower assets and related infrastructure by Brookfield on Friday.
Under the Term Sheet, the specified assets are intended to be transferred from Reliance Infratel Ltd. (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.Considerable growth is expected by RCOM and Brookfield 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 will receive an upfront cash payment of Rs. 11,000 crore from the proposed transaction. RCOM will also enjoy 49% future economic upside from the towers business, based on certain conditions.Several opportunities are available to RCOM and Brookfield 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.RCOM will cease to be a mobile telephony firm and will turn into an enterprise firm with data centres, optic fibre global submarine cables, etc. once the two transactions are closed.
Earlier RCOM entered into a similar non-binding pact in December 2015 with private equity firm but that deal did not go through over some valuation issues and it later signed a deal with Brookfield