Reliance Communications Ltd. (RCOM) has signed a non-binding term sheet with Brookfield Infrastructure Group (Brookfield) in relation to the proposed acquisition of RCOM's nationwide tower assets and related infrastructure by Brookfield. Under the term sheet, the specified assets are intended to be transferred from Reliance Infratel Ltd. (RITL) on a going-concern basis into a separate SPV, to be owned by Brookfield. RCOM will continue as an anchor tenant on the tower assets, under a long-term MSA, for its integrated telecommunications business. RCOM will receive an upfront cash payment of 11,000 crore from the proposed transaction. RCOM will also enjoy 49 percent future economic upside from the towers business, based on 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. RCOM and Brookfield also see several opportunities for consolidation in the towers industry in India that will further enhance growth and value creation in the future. RCOM intends to utilize the proceeds of the proposed transaction solely to reduce its debt.