RCOM signs binding agreements with Brookfield Infrastructure and its institutional partners

For sale of its towers business

Reliance Communications (RCOM) announced the signing of binding agreements with Brookfield Infrastructure in relation to the acquisition of RCOM's nationwide tower assets by affiliates of Brookfield Infrastructure Partners LP and its institutional partners.

RCOM will receive an upfront cash payment of Rs. 11,000 crore (US$ 1.6 billion) on completion of the transaction.

RCOM will also receive Class B non-voting shares in the new Tower company, providing 49% future economic upside in the Towers business, based on certain conditions. RCOM expects significant future value creation from the B Class shares, based on growth in tenancies arising from increasing 4G rollout by all telecom operators and fast accelerating data consumption.

 

RCOM's telecom towers will be demerged into a separate new Company that will be 100% owned and independently managed by Brookfield Infrastructure, thereby creating the second largest independent and operator-neutral Towers company in India.

RCOM will enjoy certain information and other rights, but will not be involved directly or indirectly in the management and operations of the new Company.

RCOM and Reliance Jio will continue as major long term tenants of the new Tower company, along with other existing third party telecom operators.

RCOM will utilize the upfront cash payment of Rs. 11,000 crore (US$ 1.6 billion) solely to reduce its debt. The already announced combination of RCOM's wireless business with Aircel, and the monetization of the Tower business, will together reduce RCOM's overall debt by Rs. 31,000 crore (US$ 4.6 billion), or nearly 70% of existing debt.

RCOM will continue to hold 50% stake in the wireless business combination with Aircel and the 49% future economic upside in the towers business, and will monetise these valuable assets at an appropriate time in the future to further substantially reduce its overall debt.

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