Reliance Communications Limited has announced that it has signed term sheet with Brookfield Infrastructure Group for sale of its telecom tower business.
As per the deal, the specified assets are intended to be transferred from Reliance Infratel on a going concern basis into a separate special purpose vehicle to be owned by Brookfield. RCom will continue as an anchor tenant on the tower assets, under a long term Master Service Agreement (MSA), for its integrated telecommunications business.
The Anil Ambani Group firm will receive an upfront cash payment of Rs 11,000 crore from the proposed transaction and it intends to use the proceeds to reduce its debt.
RCom will also enjoy 49% future economic upside from the towers business, subject to certain conditions. RCom and Brookfield expect considerable growth in tenancies based on increasing 4G offerings by all telecom operators, and the fast accelerating trends in data consumption, which are expected to contribute to significant growth in revenues and profitability for the towers business in the future.
Reliance Communications, which rose to Rs 48.40 after the company announced the deal with Brookfield, is trading more than 2% up at Rs 47.65 now.