RCom inks pact with Tillman Global Holdings to sell tower assets
Anil Ambani-controlled Reliance Communications has signed a non-binding term sheet with Tillman Global Holdings and TPG Asia to sell its nationwide tower assets and related infrastructure. Yet, financial analysts and industry watchers estimate the deal size could be close to Rs 22,000 crore for the tower and a few thousand crores more for other assets.
Tillman and TPG will also evaluate purchase of Reliance Communications’ nationwide inter-city and intra-city optic fibre assets, in a separate and independent transaction.
RCOM will continue as an anchor tenant on the tower assets, under a long term MSA, for its integrated telecommunications business. RCom which holds about 96 per cent stake in the tower unit will use the sale proceeds to bring down its debt of around Rs 38,000 crore.
This would be one of the biggest transactions in the Indian telecom sector.
After the deal, its interest costs will come down by 85 per cent to just Rs 600 crore a year and will have the lowest debt amongst all telecom companies in India. Rcom now has some 45,000 telecom towers. Tillman Global Holdings is a US-based holding company which invests in and creates telecom and energy infrastructure businesses focused on developed and emerging markets.
The buyers will also consider purchasing the Mumbai-based company’s inter-city and intra-city optic fiber assets across the country in a separate transaction, the statement said. With 43,700 towers, the enterprise valuation of the company is quite similar to Viom Networks, in which a 51% stake was recently acquired by American Tower at an enterprise valuation of around Rs 20,000 crore.
The two sides have entered into an exclusivity agreement till 15 January 2016. Reliance Communications said last month bidders were in advanced due diligence and completion of the deal would substantially reduce its debt burden.
Shares of the company declined Rs 2.6, or 3.11%, to trade at Rs 81.05. In 2013, RCOM had agreed to share its towers with the Mukesh Ambani-led Reliance Jio for 15 years till 2030.