RCom tower sale deal with Tillman Global extended by 15 days

The company which has 43,379 towers across India, intends to use the proceeds to cut net debt by 75%

The mobile tower sale deal of Reliance Communications with private equity firm Tillman Global Holdings LLC and TPG Asia, which was to close by January 15, has been extended till month end.

"Given the extensive and complex nature of the deal the due diligence in the documentation will take couple of more days to be finalised. Therefore, companies as per the clause which is already existing in the term sheet signed in end December are extending final closure for a period of 15 days," a source privy to the development said.

RCom, which has 43,379 towers across India, intends to use the proceeds to cut net debt by 75% -- from Rs 39,894 crore to under Rs 10,000 crore.

The company is looking at realising Rs 22,000 crore from sale of towers, which will be transfered from its subsidiary Reliance Infratel Ltd into a separate special unit that will be fully owned by the two private equity firms, and another Rs 8,000 crore from sale of inter-city and intra-city optic fiber infrastructure.

Under the term sheet, the assets will be transferred from Reliance Infratel Ltd (RITL) on a going concern basis into a separate SPV, to be owned 100% by Tillman and TPG.

RCom will continue using towers as an anchor tenant under the terms of deal.

After the deal, RCom's interest costs will come down by 85% to just Rs 600 crore a year and will have the lowest debt amongst all telecom companies in India. Currently, the interest cost is at about Rs 3,600 crore.

Besides, Tillman and TPG will also evaluate purchase of RCom's extensive nationwide inter-city and intra-city optic fibre assets, in a separate and independent transaction.