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 Rs. 11,000 crore from the proposed transaction. RCOM will also enjoy 49% 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.
The proposed Transaction is subject to definitive documentation, customary approvals and certain other terms and conditions. Accordingly, there can be no certainty that a transaction will result. Further announcements will be made at an appropriate stage.