Reliance Communications' deal to sell towers will lower its debt by 60%: CLSA

Tuesday, Dec 15, 2015

Reliance Communications' (RCom) impending deal for tower asset sale would lower its consolidated debt by 60 per cent, a report by CLSA said today.

RCom recently announced the signing of a term sheet with Tillman and TPG for the sale and leaseback of its 43,400 towers held by its subsidiary Reliance Infratel.

RCom owns 95 per cent stake in Reliance Infratel.

Moreover, the brokerage said, RCom's growing number of deals with Reliance Jio is unlocking the value of embedded assets while reciprocal benefits in infrastructure and spectrum sharing will fuel a data business ramp-up.

RCom is also finalising a spectrum sharing and trading deal with Reliance Jio for its 800 MHz spectrum.

CLSA said given that Reliance Jio has 5 MHz of 800MHz in only two of the top-six industry average revenue per user (ARPU) circles and nine of the 22 circles, this deal with RCom is crucial as it would ensure a pan-India footprint on 800 MHz thus boosting its 4G LTE services.

"Reliance Jio deals are aiding to unlock RCom asset values while the reciprocal benefits from sharing network and spectrum would lower capex requirement," it added.

Further proceeds from the spectrum sharing/trading deals would be used by RCom to pay the Rs 70 billion liberalisation fee for 800 MHz spectrum and repay added debt, providing further upsides.

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