The much anticipated Rs 11,000 crore deal between Reliance Communications (RCom) and Canada’s Brookfield Group for acquiring a major stake in the former’s telecom tower arm is nearing closure with various clearances like those from the government, NCLT and lenders expected by as early as next month. In December 2016, RCom had announced that it has inked an all cash deal with the Brookfield to sell a 51% stake in its tower unit — Reliance Infratel. “Since the government has abolished the Foreign Investments Promotion Board (FIPB), investment proposals of Rs 5,000 crore and above will be cleared by the Union cabinet. It (RCom-Brookfield deal) is expected to be taken up next week. Besides, approval from the National Company Law Tribunal (NCLT) is scheduled for hearing on June 28. Also RCom will start the process to take the approval from the lenders from the last week of June,” sources said.
So far, the Anil Ambani-led firm has secured approvals from CCI, Sebi, NSE, BSE and shareholders, they said adding that the approval process is expected to be completed by July. RCom expects the deal to complete by September.
A RCom spokesperson declined to comment on the deal. Following the completion of the deal, Reliance Infratel will be be renamed as TowerCom Infrastructure, which will constitute all the towers owned by the former and Brookfield Infrastructure will later buy 100% equity share capital in the entity, a person in know of the developments said.
Under the deal, Brookfield will pay the debt-laden telecom operator Rs 11,000 crore, which will be utilised to pare debt. RCom has a debt of around Rs 45,000 crore.
The deal also has a non-monetisation clause for 3 years. RCom can also come out with an IPO after 5 years as it expects considerable value creation in the next couple of years, in view of the growth expected in tenancies due to spread of 4G networks and growing appetite for data by consumers. Earlier this month, Ambani told reporters that he was banking both on the Aircel merger and tower asset sale to Brookfield, which will reduce his company’s debt by 60%, or Rs 25,000 crore.