Reliance Communications signs deal to sell telecom towers

Anil Ambani of Reliance Communications
Telecom network operator Reliance Communications on Friday announced its deal with Tillman Global Holdings and TPG Asia to sell its cellular towers and related infrastructure.

IANS reports that the value of the telecom tower deal is estimated at Rs 22,000 crore or nearly $3.4 billion. The value of the proposed inter-city and intra-city optic fiber deal is expected to be Rs 8,000 crore.

The Mumbai-based company did not disclose the value of the telecom tower deal, which is subject to due diligence, definitive documentation, etc.

Industrialist Anil Ambani-led Reliance Communications aims to reduce the mounting debt by selling the telecom tower business.

Reliance Communications aims to cut its net debt by 75 percent — from Rs 40,000 crore to under Rs 10,000 crore. This apart, the annual interests costs are also expected to come down by as much as 85 to Rs 600 crore.

Facts about Reliance Comm tower and fiber

Reliance Communications has nationwide network with 43,379 towers in 22 circles, 86,000 cell sites, 190,000 km optical fiber (OFC) network and 1.1 million sq ft data center space.

The company has 112 million wireless subscribers including 37 million data subscribers of which 19 million are 3G.
Reliance Communications has a mesh network for optical backhaul with large number of urban sites fiberised, capable of high speed broadband services including 4G services.

The company claims that its 43,379 towers, located in 22 circles in India, are capable of housing 4 tenants and can be enhanced to 7 tenants with marginal Capex.

Reliance Communications says it has the largest network of backhaul optical fiber amongst all private operators. Total length of fiber is 190,000 kms with 120,000 kms intercity and balance intracity Routes have 6, 12 and 24 Pair Fiber Cables. The company can offer spare ducts, which can increase capacity multiple times with marginal Capex (capital spending).

Tower deal

Reliance Communications, which recently announced its decision to buy small rival MTS India, will transfer telecom towers from Reliance Infratel on a going concern basis into a separate special purpose vehicle (SPV). The SPV will be  owned 100 percent by Tillman and TPG.
Reliance Communicatons tower dealIn 2013, Reliance Jio Infocomm, a pan-India 4G telecom operator in India, had entered into an agreement with Reliance Communications for sharing its extensive inter-city and intra-city infrastructure of nearly 520,000 km of optic fiber pairs, besides 45,000 towers. The aggregate value of the deal was pegged at Rs 12,000 crore, IANS reported.

Reliance Communications will continue as an anchor tenant on the tower assets, under a long term MSA (Master Service Agreement), for its telecom business in India.

Tillman and TPG will also evaluate purchase of Reliance Communications’ nationwide inter-city and intra-city optic fibre assets, in a separate and independent transaction.

“The parties have entered into an exclusivity agreement valid till January 15, 2016. The proposed transaction is subject to final due diligence, definitive documentation, applicable regulatory and other approvals and certain other terms and conditions,” said a statement from Reliance Communications.

Reliance Communications said there can be no certainty that a transaction will result. Reliance Communications will make further announcements at an appropriate stage.

Baburajan K
[email protected]