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Brookfield in $1.65bn Indian telco deal

The agreement marks the second attempt by Indian giant Reliance Communications to sell its telecom towers in a bid to reduce debt.

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Brookfield Infrastructure Group has agreed to acquire a majority stake in a portfolio of telecom towers belonging to India’s Reliance Communications for 110 billion rupees ($1.65 billion; €1.5 billion). 

The two parties have signed a non-binding agreement which will see Reliance’s tower assets and related infrastructure transferred from its subsidiary Reliance Infratel to a special purpose vehicle owned by Brookfield. Reliance will continue as an anchor tenant on the tower assets under a long-term agreement. 

The Canadian asset manager will make an upfront cash payment of 110 billion rupees but it is unclear whether the capital will be deployed from its latest infrastructure fund, which closed on $14 billion in July. Brookfield had not responded to emailed queries by press time. 

Reliance intends to use the proceeds solely to reduce debt, it said in a statement, adding that it will remain interested in the future performance of the asset.   

“Reliance 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,” Reliance said in the statement.

The same portfolio was supposed to be sold to two US buyout firms, TPG and Tillman Global Holdings, when Reliance entered into a non-binding agreement with the two potential buyers last December. According to local reports, TPG walked away from the deal after it emerged that Reliance was expecting a higher valuation for its assets. 

Last month, Reliance and Aircel, another major Indian telecoms group, proposed to merge their wireless units. The newly formed entity will have an asset base of over 650 billion rupees and rank among the country’s top four telecoms operators by customer base and revenues. 

Earlier in September, Brookfield teamed up with Core Infrastructure India Fund to acquire a portfolio of six road assets from local infrastructure company Gammon Infrastructure. The deal was the largest single transaction ever closed in the Indian roads sector, as well as the first major infrastructure investment Brookfield had made in the country since it set up an outpost there in 2009.