India’s Reliance Communications (RCom), which is part of Billionaire Anil Ambani’s group companies, has signed a pact to sell its tower and optical fiber network assets in India to private equity firms TPG and Tillman Global in a deal estimated at about 4.6 billion US dollars.
RCom intends to utilize the proceeds of the proposed transaction to reduce its debt, which is estimated at around 6.1 billion US dollars.
The company officials said “a non-binding term sheet” has been signed for the proposed acquisition of RCom’s nationwide tower assets and related infrastructure by Tillman and TPG Asia.
While company officials did not disclose the deal size, sources said the proposed transaction values RCom’s mobile towers at about 3.4 billions and the valuation of the related infrastructure, including optical fiber network assets, is estimated at about 1.2 billion dollars. This would be one of the biggest transactions in the Indian telecom sector.
The company said the realization of the deal proceeds would help bring down its interest cost by 75% to 92 million US dollars.
RCom said it will continue as an anchor tenant on the tower assets, under a long-term agreement, for its integrated telecommunications business.
Tillman and TPG will also evaluate purchase of RCom’s extensive nationwide inter-city and intra-city optical fiber network assets, in a separate and independent transaction.
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 100% by Tillman and TPG.
RCom owns about 96% stake in RITL, which has about 43,500 mobile towers across the India. The remaining 4% stake is owned by institutional investors.
The statement further said the parties have entered into an exclusivity agreement valid till January 15, 2016.
RCom said the proposed transaction is subject to final due diligence, definitive documentation, applicable regulatory and other approvals and certain other terms and conditions.