India’s Reliance Communications has signed a non-binding agreement to sell its tower assets and related infrastructure to US-based telecoms infrastructure investment firm Tillman Global Holdings (TGH) and private equity firm TPG Asia. TGH, led by former Orange CEO Sanjiv Ahuja, and its financial partner are entering the Indian tower sector as it benefits from a boom in data and regulatory reforms.
India’s Reliance Communications (NSE:RCOM) has signed a non-binding agreement to sell its tower assets and related infrastructure to US-based telecoms infrastructure investment firm Tillman Global Holdings (TGH) and private equity firm TPG Asia.
The agreement will see the assets transferred from RCom’s tower unit Reliance Infratel on a going concern basis into a separate special purpose vehicle owned by TGH and TPG, the Mumbai-based telco said in a statement.
RCom, India’s fourth largest mobile operator, will be an anchor tenant on the tower assets under a long-term managed services agreement.
Tillman, led by founder and former Orange and LightSquared CEO Sanjiv Ahuja, and TPG Asia, part of the US-based TPG group, will also look at purchasing RCom’s fibre optic assets in a separate transaction. Ahuja is also a co-founder of African towerco Eaton Towers, which says it has more than 5,000 towers in seven countries.
The exclusivity agreement is valid until 15 January 2016 and the proposed deal is subject to final due diligence, definitive documentation, relevant approvals and terms and conditions.
RCom, advised on the deal by Standard Chartered and SBI Capital Markets, plans to use the proceeds to reduce a debt pile which mounted to Rs399bn (US$6bn) at the end of September.
According to a local report late last week, TGH, which says it has assets in some 15 countries in Asia, Africa, Europe and North America, and TPG were frontrunners to buy RCom’s tower assets, with hedge fund investor Farrallon Capital Management, also US-based, the only other serious contender. American Tower and private equity firm Carlyle were previously linked to the process.
According to the report, Ahuja, a friend of Reliance Group chairman Anil Ambani, is expected to manage operations, while TPG would provide the financial backing. TPG claims to have US$74.3bn of capital under management globally, with investments in a variety of sectors including technology, media and communications and financial services. It entered Asia in 1994 and now has offices in Hong Kong, Beijing, Shanghai, Singapore, Tokyo, Mumbai and Melbourne.
RCom has a 96% stake in Reliance Infratel, the country’s second-largest towerco with nearly 45,000 masts, an extensive fibre optic network and estimated enterprise value of Rs210bn-Rs220bn (US$3.1bn-US$3.3bn).
Analysys Mason partner head for India and South Asia, Rohan Dhamija, expects a growth phase in the Indian tower sector thanks to the data boom, the increasing resolution of regulatory issues, and start of telecoms consolidation.
American Tower reached a long-anticipated agreement to acquire a 51% stake in Viom Networks for Rs76bn (US$1.2bn) in October, and other telcos such as Vodafone India, Idea Cellular and BSNL have been rumoured to be looking at tower sales.
