Reliance Communications shares gained 3.6 percent intraday Friday after signing term sheet with Canada-based asset management company for tower business.
“…announced the signing of a non-binding term sheet with Brookfield Infrastructure Group in relation to the proposed acquisition of company’s nationwide tower assets and related infrastructure by Brookfield,” the Reliance Group company said.
Under the term sheet, the specified assets are intended to be transferred from Reliance Infratel (RITL) on a going concern basis into a separate SPV, to be owned by Brookfield.
Reliance Communications will continue as an anchor tenant on the tower assets, under a long term master service agreement, for its integrated telecommunications business.
“RComm will receive an upfront cash payment of Rs 11,000 crore from the proposed transaction and will also enjoy 49 percent future economic upside from the towers business, based on certain conditions,” it said.
The company will utilise proceeds of the proposed transaction solely to reduce its debt.
Reliance Communications 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.
They also see several opportunities for consolidation in the towers industry in India that will further enhance growth and value creation in the future.
Last month, the Reliance Group company signed an agreement with Maxis Communications Berhad (MCB) for the merger of wireless business of Aircel with itself that will result in debt reduction by Rs 20,000 crore or over 40 percent of total debt.
At 12:19 hours IST, the scrip of Reliance Communications was quoting at Rs 47.60, up Rs 0.90, or 1.93 percent on the BSE.
Posted by Sunil Shankar Matkar