Reliance Communications (RCom), the fourth-largest mobile operator in India, has signed a non-binding agreement to sell its nationwide tower assets and related infrastructure to Tillman Global Holdings (Tillman) and TPG, two US buyout firms.
Based on precedent tower transactions in India, rating agency Moody’s expects the buyers to pay about INR220 billion (€3.03 billion; $3.35 billion) for about 43,500 towers. RCom didn’t disclose the deal size.
The company intends to use the proceeds to reduce debt, according to a statement. At the end of its second quarter results, RCom’s net debt stood at INR400 billion.
Under the terms of the transaction, the tower assets will be transferred from Reliance Infratel, a Reliance Communications’ subsidiary, to a separate special purpose vehicle wholly owned by Tillman and TPG. RCom will continue as an anchor tenant on the tower assets under a long term agreement.
The exclusivity agreement is valid until 15 January 2016. The deal is subject to final due diligence and regulatory approvals, among others.
Tillman and TPG are also evaluating the purchase of RCom’s 190,000-kilometre optic fibre assets, as part of a separate and independent transaction. These assets are valued at around INR70-80 billion.
Reliance Communications and Tillman did not respond to queries, while TPG declined to comment.
Founded in 2013 by telecom industry veteran Sanjiv Ahuja, New York-based Tillman invests in telecom and energy infrastructure businesses in both developed and emerging markets.
With $74.3 billion of capital under management, TPG invests in a wide range of industries, It stepped into Asia in 1994 through its affiliate Newbridge Capital and has offices in Hong Kong, Beijing, Shanghai, Singapore, Tokyo, Mumbai and Melbourne.
In October, global REIT American Tower Corporation acquired a 51 percent controlling interest in Viom Networks, which is the owner and operator of about 42,200 wireless communications towers and 200 indoor distributed antenna systems across India for $1.2 billion. Combining its own portfolio of 14,000 communication towers in India, American Tower became the market’s second-biggest mobile mast operator by number of towers.