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Competition watchdog clears $1.6 bn Brookfield-RCom tower deal

23 March, 2017

The Competition Commission of India (CCI) has approved the sale of the tower assets of Reliance Communication Ltd to Canadian investment firm Brookfield Infrastructure Partners, pushing the $1.6 billion deal closer to completion.

Billionaire Anil Ambani-led RCom had agreed to sell the tower business housed under unit Reliance Infratel Ltd to Brookfield late last year to help cut its debt.
As per the deal, Reliance Infratel will demerge its tower assets into a new company called Towercom Infrastructure Pvt Ltd. Brookfield will then acquire Towercom, Reliance said in a stock-exchange filing.

The company has also filed an application with the National Company Law Tribunal for approval of the deal, the company said.

Apart from receiving the upfront payment for the tower assets, Reliance will retain a 49% future economic upside from the business based on certain conditions. It did not share details on the structure of the deal.

“It is good news for both the companies as the CCI opined that the transaction will not likely to have an appreciable adverse effect on competition in India,” said Vaibhav Choukse, principal associate at the law firm J Sagar Associates.

Reliance Communications holds around 91% of Reliance Infratel while the remaining stake is held by US investor George Soros’ Quantum, New Silk Route and other investors. Reliance Communications will continue as an anchor tenant on the tower assets, under a long-term agreement, for its telecommunications business.

The telecom infrastructure sector in India is going through a consolidation phase for quite some time now. In late 2015, NYSE-listed American Tower Corporation acquired a controlling stake in telecom tower firm Viom Networks Ltd for Rs 7,635 crore ($1.2 billion then) in cash.

Around the same time, KEC International Ltd sold its 381 telecom sites in Chhattisgarh, Meghalaya and Mizoram to ATC for Rs 81 crore.


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Competition watchdog clears $1.6 bn Brookfield-RCom tower deal

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