After its proposed merger with Aircel collapsed, Reliance Communications (RCom) is weighing up whether to sell its tower unit in its entirety to Brookfield Asset Management.
The Canadian investment group agreed in October 2016 to acquire 51% of Reliance Infratel, but with a merger between RCom and Aircel now firmly off the agenda, the tower assets can no longer guarantee the income assumed at the time of the deal.
When it signed the agreement, Brookfield had expected that following the merger both Aircel and RCom would be using the tower infrastructure. With this no longer the case, the guaranteed usage of the towers will now be substantially lower, which poses a threat to Brookfield’s return on investment.
As a response, RCom has reportedly indicated that it could sell the unit to Brookfield outright instead of retaining a minority holding as it previously planned. Renegotiating this deal is another headache for RCom, which is already facing legal action from Ericsson, with the Swedish vendor claiming that the operator owes it a debt of INR11.56 billion ($180 million).
For the fiscal year ending March 2017, RCom registered its first ever annual loss, amounting to INR12.85 billion. At the same time the operator confirmed debts of INR440 billion, which it had been aiming to pay down with the funds generated from selling off part of its Infratel holding.
