Carlyle, TPG Said in Talks to Buy Reliance’s Tower Assets

Carlyle, TPG Said in Talks to Buy Reliance Phone Tower Unit
A Reliance Communications Ltd. tower stands off a main road in New Delhi. Photographer: Prashanth Vishwanathan/Bloomberg

TPG Capital and Carlyle Group are among private equity companies in talks about purchasing a stake in Reliance Communications Ltd.’s mobile-phone towers unit, said three people with knowledge of the matter.

Reliance Communications, India’s second-largest mobile phone operator, also has received interest from potential investors including Blackstone Group LP, the world’s biggest private equity firm, and London-based Apax Partners LLP, said one of the people, who declined to be identified because the discussions are private.

Billionaire Anil Ambani’s flagship company has been trying to sell the unit for about a year as it seeks to reduce debt. The company said in June 2010 it was in “advanced talks” to sell about 50,000 telephone towers.

“If Reliance Communications does sell its tower business, then it will have a positive impact on the company’s profitability,” said G.V. Giri, a Mumbai-based analyst with IIFL Capital Ltd. who has a ‘reduce’ rating on the stock. “The tower business will pass into a neutral ownership from an operator-owned business and it will be capable of attracting more tenancy.”

The shares jumped as much as 2 percent to 93.9 rupees in Mumbai today, while the benchmark Bombay Stock Exchange Sensitive Index, or Sensex, dropped 0.2 percent. The company is the worst-performing stock in the index this year, with a 36 percent drop.

‘Indicative Offers’

“Formal indicative offers from several interested parties” for Reliance’s Infratel unit were received, the Mumbai-based company said in a statement to the Bombay Stock Exchange on May 31, without naming any bidders. The mobile-phone operator’s board approved taking the sale process to the next stage of due diligence, according to the release.

Gaurav Wahi, a spokesman for Reliance Communications in Mumbai, didn’t immediately respond to a call seeking comment. Blackstone said in an e-mailed response that it doesn’t comment on industry speculation. Dorothy Lee, a spokeswoman for Carlyle in Hong Kong, and Ben Harding, a spokesman for Apax in London, declined to comment. Tim Payne, an external spokesman for TPG, couldn’t immediately be reached for comment.

Majority Stake

Reliance Communications may sell a majority stake in the unit, the people said. The company scrapped a deal in August to sell the business to GTL Infrastructure Ltd.

Cash from the sale of assets may help replenish Reliance Communications’ finances after the company said March 9 that it will save 5 billion rupees ($112 million) by borrowing 87 billion rupees from a group of lenders led by China Development Banking Corp. to refinance the purchase of third-generation airwaves and buy equipment.

Reliance’s debt exceeded cash and equivalents by 320 billion rupees at the end of March compared with 199 billion rupees a year earlier, according to the phone operator.

Private equity investments in India reached $3.36 billion so far this year, compared with $3.77 billion for all of 2010, according to data compiled by Bloomberg.


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