RCom- Brookfield agreement sealed; stock up 10 %

India’s fourth largest telecom player,Reliance Communications today announced the signing of binding agreements with Brookfield Infrastructure in relation to the acquisition of RCom’s nationwide tower assets by affiliates of Brookfield Infrastructure and its institutional partners.

RCom will receive an upfront cash payment of Rs 11,000 crore on completion of the transaction, which has been in the works for more than a year. The amount raised by the company through sale of the tower arm will help in paring down its huge pile of debt.

The transaction represents the largest ever investment by any overseas financial investor in the infrastructure sector in India, reflecting the strong confidence of the foreign investor community in the country.

RCom’s telecom towers will be demerged into a separate new company that will be 100 per cent owned and independently managed by Brookfield Infrastructure, thereby creating the second largest independent and operator-neutral Towers company in India.

The already announced combination of Rcom’s wireless business with Aircel, and the monetisation of the Tower business, will together reduce RCom’s overall debt by Rs 31,000 crore, i.e. nearly 70 per cent of company’s existing debt.

Bharti Infratel is also in talks to hive off its tower business to a PE firm.

Reacting to the news the stock surged more than 10 per cent intra-day to hit a high of Rs 38.50 on NSE.