Anil Ambani-led Reliance Communications Ltd has signed a non-binding pact to sell its cellular towers to private equity firm Tillman Global Holdings LLC and TPG Asia Inc in an estimated Rs 30,000 crore deal to pare debt.
RCom, which has 43,379 towers across India, intends to use the proceeds to cut net debt by 75 per cent -- from Rs 39,894 crore to under Rs 10,000 crore.
The company is looking at realising Rs 22,000 crore from sale of towers, which will be transfered from its subsidiary Reliance Infratel Ltd into a separate special unit that will be fully owned by the two private equity firms, and another Rs 8,000 crore from sale of inter-city and intra-city optic fiber infrastructure.
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TPG and Tillman have time until January 15 to finalise the deal, India's fourth-largest telecom operator said in a statement today. The deal will be subject to final due diligence and regulatory approvals.
In the statement, RCom said it has signed "a non-binding term sheet with Tillman Global Holdings, LLC and TPG Asia, Inc in relation to the proposed acquisition of RCom's nationwide tower assets and related infrastructure by Tillman and TPG."
Under the Term Sheet, the assets will be transferred from Reliance Infratel Ltd (RITL) on a going concern basis into a separate SPV, to be owned 100 per cent by Tillman and TPG.
"RCom will continue as an anchor tenant on the tower assets, under a long term MSA, for its integrated telecommunications business," it said. "RCom intends to utilise the proceeds of the proposed transaction only to reduce its debt."
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. Currently, the interest cost is at about Rs 3,600 crore.
Besides, Tillman and TPG will also evaluate purchase of RCom's extensive nationwide inter-city and intra-city optic fibre assets, in a separate and independent transaction, it added.
RCom had in 2013 signed an agreement to share its towers with Mukesh Ambani's Reliance Jio in a 15-year deal valued at Rs 12,000 crore.
