Anil Ambani Starts Talks With TPG, Tillman to Sell Towers

  • Tillman, TPG will consider buying optic fiber assets too
  • Reliance Communications to use proceeds to pare debt

Anil Ambani-controlled Reliance Communications Ltd. said it has signed a non-binding pact to sell its cellular towers across India to private equity firms Tillman Global Holdings LLC and TPG Asia Inc. in a bid to pare its debt.

The wireless operator, which has 43,379 towers across India, will transfer these assets from its subsidiary Reliance Infratel Ltd. into a separate special unit that will be fully owned by the two private equity firms, according to an exchange filing. TPG and Tillman have time until Jan. 15 to ratify the deal, Reliance Communications said without disclosing a value.

The buyers will also consider purchasing the Mumbai-based company’s inter-city and intra-city optic fiber assets across the country in a separate transaction, the statement said. Shares of the company dropped 3.2 percent to 80.95 rupees on Friday in Mumbai, the biggest loss since Nov. 13., versus the 1 percent decline in the benchmark S&P BSE Sensex.

The sale would help India’s fourth-largest wireless service provider by subscribers cut net debt that stood at 398.94 billion rupees ($6 billion) at the end of September, company filings show. Reliance Communications said last month bidders were in advanced due diligence and completion of the deal would substantially reduce its debt burden. The tower business may fetch a valuation of about 200 billion rupees including debt, people said in May, asking not to be identified as the information is private.

Exercising Caution

American Tower Corp. agreed in October to buy 51 percent of India’s Viom Networks Ltd. in October for 76 billion rupees in a cash deal, as operators look to monetize assets.

Investors will stay cautious until completion of Ambani’s deal and will wait for further developments in the optic fiber business talks, according to Abhimanyu Sofat, the Mumbai-based co-founder of AdviseSure Ventures Pvt., an investment advisory firm. 

“For now traders are unwinding their positions after the stock rallied the end of last month on expectations of this announcement,” he said. “Investors will watch for the rentals charged to the operator as part of the deal.” 

Sharing Towers

The company is also in discussions with strategic and financial investors for a sale in Global Cloud Xchange, the undersea cable operations of the company, according to a November investor presentation on the company’s website. A deal is likely to be completed by March 2017, it said.

In 2013, Reliance Communications agreed to share its towers with Reliance Industries Ltd., led by Anil Ambani’s billionaire brother Mukesh, in a deal valued at about 120 billion rupees. The tower sharing agreement with Reliance Jio is for 15 years till 2030, according to the presentation.

Both TPG and Tillman have been collaborating to acquire tower assets in South Asia. TPG, which manages $74.3 billion, and Sanjiv Ahuja, former LightSquared Inc. chief executive officer and now part of Tillman’s leadership, had invested in Apollo Towers Myanmar Ltd. in 2014, as the Asian country emerged from the military rule.

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