NCLT okays resolution plan for Reliance Infratel; may entail sale of assets

Decks cleared for sale of tower, fibre assets to Reliance Digital

The National Company Law Tribunal (NCLT) in Mumbai has approved a resolution plan for Reliance Infratel, which sources say entails the sale of its tower and fibre assets with some minor riders. As part of the plan, which was passed in March by all the members of the Committee of Creditors (CoC) led by the State Bank of India (RBI), Reliance Digital Platform, a group firm of Reliance Jio, will pay around Rs 3,720 crore for the deal.

Reliance Digital Platform was the highest bidder for the stressed assets. Reliance Jio declined to comment.

According to sources, the Tribunal cleared the Reliance Infratel sale with a rider that the distribution of the proceeds is subject to the disposal of an intervention application filed by one of the lenders, Doha Bank.

The Tribunal’s decision will add an additional 43,000 towers to the Jio-Brookfield tower Infrastructure Investment Trust (InvIT) called Tower Infrastructure Trust which already owns over 175,000 towers. This will make it by far the largest mobile tower infrastructure player in the country.

Its closest rival is Bharti Infratel-Indus Towers which owns 172,000 towers. The third largest player and the largest independent operator in the tower business is American Tower Corporation which has around 70,000 towers.

Analysts say that the 5G roll out will call for a doubling (if not tripling) of towers because it operates in a higher band and this will provide an opportunity for increased tenancy. Currently, the main tenant on the Ambani InvIT is Jio. The deal will also add another 172,000 kilometres of fibre to the InvIT formed by Jio, the Abu Dhabi Investment Authority and the Public Investment Fund combine which already owns over 1.1 million kilometres of fibre optic cable in India, with its  nearest rival in the telecom space  not even a third of that size.

The acquisition will help Jio to move more aggressively to complete its plan to cover over 30 million households with fibre-to-home services — a key area of growth for the firm. Reliance Infratel is a 100 per cent subsidiary of Reliance Communications which was admitted under the IBC in 2019 after the company and its subsidiaries saw their outstanding loan dues balloon to over Rs 45,000 crore. 
 

After the launch of Reliance Jio and the ensuing price war, the company was forced to fold in 2017, like many others, as part of the consolidation in the telecom industry.

The CoC has also cleared the sale of Reliance Communica-tions and its second subsidiary, Reliance Telecom Infrastructure, to Delhi-based UV Asset Reconstruction Company which had offered to pay Rs 14,000 crore for the use of spectrum, data centres, real estate, and the enterprise business.  

Currently, a substantial portion of the spectrum of around 58.75 MHZ in the crucial 800 MHz band is being used by Reliance Jio as part of an ongoing spectrum-sharing agreement.

The deal is a steal and less than a fourth of what Brookfield was ready to pay in 2016 as part of an agreement with RCom. At that time, Brookfield had signed a non-binding agreement to buy 51 per cent in the tower business for Rs 11,000 crore. However, even after both the Reliance Jio and UVARC deals are cleared, the 38 lenders will be able to recover around 50 per cent of the total dues. The bidders have committed they will pay 30 per cent of the proceeds within 90 days.