Anil Ambani’s Unit to Get $1.65 Billion Selling Tower Assets

  • Reliance Communications shares advance, paring 2016 drop
  • Company said it plans to use proceeds to reduce debt burden

Anil Ambani

Photographer: Abhijit Bhatlekar/Mint via Getty Images

Reliance Communications Ltd., Indian billionaire Anil Ambani’s telecommunications unit, said it agreed to sell its mobile-phone tower business to Brookfield Infrastructure Group for an upfront payment of 110 billion rupees ($1.65 billion) to help reduce debt.

The Mumbai-based company will also get 49 percent “future economic upside” from the business as per the non-binding agreement with Toronto-based Brookfield, Reliance Communications said in a statement on Friday. The company’s shares advanced as much as 3.8 percent before trading 2 percent higher at 47.65 rupees as of 2:42 p.m. in Mumbai.

The deal comes as intensifying competition has driven Reliance Communications shares down 46 percent this year, the worst performance in the S&P BSE 100 Index after rival carrier Idea Cellular Ltd. Reliance Communications is selling assets to pay loans as it seeks to turn net-debt free by 2017. It had net debt of 404.8 billion rupees as of Dec. 31, compared with operating profit of about 30 billion rupees in the year ended March, company filings show.

“If the deal goes through, they would be an asset light company hereafter,” said  Deven Choksey, managing director at Mumbai-based KR Choksey Shares & Securities Pvt. Ltd. “They will be able to focus on communication activity.”

The company said in Friday’s statement that there is no certainty the transaction with Brookfield will materialize. Reliance Communications said it will remain as an anchor tenant on the towers to be owned by Brookfield, an affiliate of Canada’s largest asset manager.

Reliance Communications had in December signed a non-binding pact to sell the cellular towers to private equity firms Tillman Global Holdings LLC and TPG Asia Inc. The deal fell through because of differences over valuations.

Last month the company said it will merge its mobile arm with smaller operator Aircel Ltd. helping it reduce borrowings by 200 billion rupees. Reliance and Maxis Communications Bhd., which controls Aircel’s parent, will have equal stakes and representation. Also in September,
Anil Ambani’s carrier said it had achieved a “virtual merger” with Reliance Jio Infocomm Ltd., a telecom operator started by Anil’s older brother Mukesh. The companies will share spectrum, networks and towers with Reliance Jio, Anil Ambani told shareholders.

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