RIL arm in ₹25,215cr deal with Brookfield
NEW DELHI: Reliance Industries Ltd’s (RIL’S) wholly owned subsidiary, Reliance Industrial Investments and Holdings Ltd, has entered into binding agreements with Brookfield Infrastructure Partners LP and its institutional partners for an investment of ₹25,215 crore in the units to be issued by Tower Infrastructure Trust, its tower arm, the company said in a filing to the exchanges on Monday.
The deal is in line with the overall objective of RIL, the parent of India’s only profitable telecom operator Reliance Jio, to reduce debt in its high-capex telecom business and increase focus on building its digital services portfolio.
RIL had in July announced that it was in talks with Brookfield and that the transaction closure was subject to completion of due diligence, documentation, and statutory and regulatory approvals. This is the single largest foreign investment in an Indian infrastructure vehicle, the company had said in July.
Before this announcement in July, tower and fiber passive infrastructure assets of approximately ₹1.25 lakh crore were demerged from Reliance Jio Infocomm Ltd in March 2019 to Infrastructure Investment Trusts (Invits). The fibre and tower undertakings, Jio Digital Fibre Pvt. Ltd and Reliance Jio Infratel Pvt. Ltd respectively, operate as independent entities with transfer of control to the Securities and Exchange Board of India registered Invits.
On Monday, RIL said at the closing of the transaction, the Tower Infrastructure Trust will own 100% of the issued and paid up equity share capital of Reliance Jio Infratel Pvt. Ltd, which has 130,000 communication towers in its portfolio. The company plans to take the total number of towers to 175,000. The Brookfield deal values the tower assets undertaking at ₹55,400 crore.
Jio will be the anchor tenant of the tower portfolio under a 30-year master services agreement, Reliance said on Monday.
RIL is also simultaneously engaged with potential investors to divest stake in its fibre assets.
The tower stake deal will give more firepower to Jio in the telecom battlefield at a time when its loss-making rivals Bharti Airtel and Vodafone Idea await government clearance for the merger of Indus Towers and Bharti Infratel. This merger will help Bharti Airtel and Vodafone Group Plc, promoters of Indus Towers, to sell their stake, bring down debt and invest in wireless operations in India, which have been facing the heat of a tariff war started with the entry of Reliance Jio in September 2016.