Anil Ambani-controlled Reliance Group's telecom arm Reliance Communications Ltd (RCOM) has entered into an initial agreement with private equity investors Tillman Global Holdings and TPG Asia to sell its tower assets and other related infrastructure across the country to reduce its mounting debt, according to a stock market disclosure.
The financial terms of the deal, however, have not been disclosed by the companies.
US-based investment firm Tillman Global, founded by telecom veteran and former CEO of Orange SA Sanjiv Ahuja, and TPG Asia are also looking to acquire RCOM's nationwide inter-city optic fibre assets, in a separate and independent transaction.
As per the term sheet signed by the companies, the specified assets will be transferred from Reliance Infratel on a going concern basis into a separate SPV, which is to be owned 100 per cent by TPG and Tillman.
However, RCOM will continue to be an anchor tenant on the tower assets, under a long-term master service agreement (MSA) for its integrated telecommunications business, it said in the statement.
"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. Accordingly, there can be no certainty that a transaction will result,” RCOM said.
Currently, RCOM holds nearly 96 per cent stake in Reliance Infratel, while the remaining is held by George Soros' Quantum (M) and New Silk Route, among others.
Earlier in May this year, RCOM had disclosed that it has invited proposals from investment banks to monetise assets of its tower unit Reliance Infratel within the current financial year ending on March 31, 2016 as it seeks to bring down its debt and focus on its core business.
As on March 31, 2015, the company had a net debt of Rs 36,725.7 crore.
Last month, it also agreed to acquire the wireless business of Sistema Shyam Teleservices (SSTL), which operates its telecom services under the MTS brand.
The telecom operator owns around 45,200 towers and has 1,20,000 kms of intra- and inter-city fibre laid out. Reliance Infratel is the country's third-largest tower company behind Bharti Infratel and Indus Towers.
Bharti Infratel is the largest and the only listed company in the space with nearly 86,000 towers. IT also owns a stake in Indus.
In the space, NYSE-listed American Tower Corporation (ATC) recently signed a deal to acquire a 51 per cent equity stake in telecom tower firm Viom Networks for Rs 7,635 crore (about $1.2 billion) in cash.
Co-promoted by Tata Group's privately held communications arm Tata Teleservices Ltd and the Kanoria family of SREI Infrastructure Finance Ltd, Viom counts several private investors, many of whom had backed the Kanorias in their tower firm Quippo Telecom Infrastructure.
It was created as part of a merger between Quippo and Tata Teleservices' tower unit in 2009.
Viom owns and operates about 42,200 wireless communications towers and 200 indoor distributed antenna systems across India. The deal pegs the firm's enterprise value at Rs 20,770 crore, or 11 times its annualised EBITDA and Rs 49 lakh per tower.