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Brookfield pulls out of RCom tower deal as operator considers future as MVNO

Brookfield pulls out of RCom tower deal as operator considers future as MVNO

Asset management company Brookfield Infrastructure has scrapped its $200 million deal with Reliance Communications (RCom) following the collapse of the Indian operator’s merger with Aircel last month.

A statement from Brookfield read: “the [Aircel] merger will not proceed and therefore our transaction as previously announced will not proceed either. However, we continue to monitor the evolving situation to determine if revised terms can be agreed upon."

The Canadian firm added that it would be “patient” with regard to agreeing new terms for the deal, and noted that it was pursuing “several other potential opportunities in this sector” by “evaluating a number of tower portfolios in hopes of developing a scalable presence in India”.

While Rcom's executive director Punit Garg confirmed that discussions over the deal were still ongoing, he added that other bidders would be able to put in offers for the towers concurrently. RCom had forecast that the Aircel merger and resulting Brookfield agreement would allow it to reduce its US$69.7M debt by 60%. With the collapse of the deal, Garg confirmed that RCom is looking to offer 4G services as an MVNO after shuttering its 2G and 3G voice business.

The operator is looking to monetise its spectrum assets in the 800MHz, 900MHz, 1800MHz and 2100MHz bands via spectrum sharing and trading agreements with other Indian operators. According to ratings agency Fitch, Reliance Jio is a particularly likely candidate for such a deal.

Fitch noted that the fierce competition in India’s mobile space will likely lead to RCom significantly downsizing its business and gradually pulling out of wireless voice altogether. Reliance Jio was a major catalyst for the intensifying of competition when it entered the market last year offering voice and data services that were effectively free for consumers. 

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