Reliance Communications (RCom) on Wednesday said that it had signed a binding agreement with Brookfield Infrastructure Partners to sell its tower business for an upfront payment of Rs 11,000 cr in cash on completion of the transaction. Brookfield Infrastructure is expected to give class B non-voting shares to RCom in the newly acquired business.
Meanwhile, RCom share price traded down 4 per cent intraday on the National Stock Exchange (NSE) on 22nd December, 2016.
>RCom claims that the deal to be the largest investment by a foreign investor in the Indian infrastructure business as RCom’s telecom towers shall be demerged into a separate firm that shall be wholly owned and managed by Brookfield Infrastructure.
The company added in its statement that RCom will enjoy certain information and other rights, however won’t be involved directly or indirectly in the management and operations of the novel Company. RCOM and Reliance Jio shall continue as major long term tenants of the novel tower company, along with other existing 3rd party telecom operators, the company added.
Anil Ambani-controlled RCom is selling assets to reduce debt and aims to turn net debt-free by 2017. It is the most indebted telecom service provider in India, with debt of around Rs 42,000 cr.
RCom is also merging its wireless business with smaller competitior Aircel and has said that the deal will help reduce its leverage as soon as it transfers part of its debt to the novel venture.
RCom said that on Wednesday that the proceeds from upfront payment for the tower unit and the money from the Aircel deal shall reduce its debt by 60 per cent to about Rs 17,000 cr. The company will hold a 50 per cent stake in the wireless business with Aircel and 49 per cent in non-voting shares in the tower business.For further details on the stock, visit RCom share price history.
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