Former Orange CEO Sanjiv Ahuja, backed by private equity firm TPG Capital, has reportedly emerged as the most likely buyer of Indian telco Reliance Communications’ tower unit Reliance Infratel.
Former Orange (EPA:ORA) CEO Sanjiv Ahuja, backed by private equity firm TPG Capital, has reportedly emerged as the most likely buyer of Indian telco Reliance Communications‘ (NSE:RCOM) tower unit Reliance Infratel.
Ahuja, chairman and CEO of US-based infrastructure investment firm Tillman Global Holdings (TGH), and TPG are competing with hedge fund investor Farrallon Capital Management for the asset, the Economic Times cited multiple sources saying.
Ahuja (pictured), a friend of Reliance Group chairman Anil Ambani, is expected to manage the operations if a deal is sealed, while TPG would provide financial backing.
A term sheet could be signed by the end of the month, with a binding agreement to follow, the report stated.
However, due diligence is ongoing and some outstanding issues still need to be settled, one source was cited saying.
Reliance Infratel, India’s second largest towerco with nearly 45,000 masts and an extensive fibre optic network, has an estimated enterprise value of Rs210bn-Rs220bn (US$3.1bn-US$3.3bn), however the final price tag is yet to be determined. The deal is expected to take the form of a leveraged buyout with RCom transferring about Rs160bn-Rs170bn (US$2.4bn-US$2.5bn) of debt into this equity. The equity pay out is expected to range between US$800m and US$1bn.
In addition, the buyers could insist on milestone-linked payments to Reliance.
TPG and RCom have declined to comment on the report, while Ahuja was not available.
RCom, India’s fourth largest mobile operator, has a 96% stake in Reliance Infratel, with minority shareholders including George Soros’ Quantum (M), NSR Partners, Galleon, HSBC Daisy Investment (Mauritus), Drawbridge Towers and Investment Partners B (Maurutus).
RCom chairman Anil Ambani said in late September that the company expected to agree a sale of a stake in Infratel within the next couple of months.
An earlier local media report had said the four shortlisted bidders for the sale all hailed from the US: American Tower and private equity firms Carlyle, Farallon Capital and Tillman Capital.
The sale would help RCom, advised on the deal by Standard Chartered and SBI Capital Markets, to pare down debt, which totalled Rs399bn (US$6bn) at the end of September, as well as to focus on its core telecoms business.
The transaction would come about a month after the operator agreed to acquire number nine cellco Sistema Shyam TeleServices (SSTL), which trades as MTS India, for an undisclosed sum. The deal will see RCom acquire 9 million customers, about Rs15bn (US$226m) in annual revenues and 4G-suitable spectrum.