The Competition Commission of India (CCI) has approved the divestment of Reliance Jio Infocomm telecom tower assets to Canada’s Brookfield Infrastructure Partners Lp and other investors.
The deal was announced almost a month ago by Reliance Industries, the parent company of India’s only profitable telecom operator Reliance Jio. It had signed a binding pact with asset management firm Brookfield for an investment of Rs 25,215 crore in its tower arm.
The anti-trust regulator’s approval enables RIL to go ahead with its overall objective to reduce debt in the high-CAPEX telecom business and increase focus on building digital services.
Under the agreement, RIL’s wholly-owned subsidiary Reliance Industrial Investments and Holdings (RIIHL) has entered into binding agreements with Brookfield Infrastructure Partners Lp and its institutional partners, for an investment of Rs 25,215 crore in the units to be issued by the Tower Infrastructure Trust.
Jio will continue to be the anchor tenant of the tower portfolio under a 30-year master services agreement.
The tower stake deal is significant as it will give more firepower to Jio in the telecom battlefield at a time when its loss-making rivals Bharti Airtel and Vodafone Idea still await government clearances for the merger of Indus Towers and Bharti Infratel.
Reliance had in July announced that it was in talks with Brookfield and the transaction closure was subject to completion of due diligence, documentation, and requisite statutory and regulatory approvals. This is the single largest foreign investment in an Indian infrastructure vehicle.
Reliance Jio lnfratel has 130,000 communication towers in its portfolio, which it plans to grow to 175,000.
Last Friday, Reliance Jio reported a 62.5% increase in net profit to Rs 1,350 crore for the October-December period, helped by tariff raises that aided its average revenue per user (ARPU), a key performance parameter, rebound from seven straight quarters of decline.
Net net we understand that this deal will be a long term positive for Reliance Industries the holding company for the Reliance Jio business and should improve the profitability of the Jio business ahead.
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