The Union Cabinet may next week consider Canada-based Brookfield Infrastructure Partners’ Rs 11,000-crore investment proposal to acquire Reliance Communications’ stake in its telecom tower unit Reliance Infratel, a person familiar with the matter said.
A clearance from the Cabinet will be a big step towards the Anil Ambani-owned telco getting Rs 11,000 crore, which will be used to repay lenders. The company has committed to repay most of its debt of around Rs 45,000 crore by September 30.
RCom, which has defaulted on its loan servicing obligations with more than 10 local banks, also hopes to complete its deal to merge wireless business with Aircel by September 30, which will help reduce its debt by another Rs 14,000 crore.
The debt has been at the heart of a slew of ratings downgrades amid huge pressure on the shares of the telecom company, which posted its first-ever annual loss in the last fiscal year amid plunging revenue because of intense competition.
RCom stock ended 1.9% lower at Rs 18.05, after touching a record low of Rs 17.95 intra-day on Tuesday on BSE.
RCom declined to comment on the development.
All investment proposals of Rs 5,000 crore and above now need to be cleared by the Union Cabinet as the government has scrapped the Foreign Investment Promotion Board.
The RCom's deal with Brookfield has already received approvals from its shareholders, Competition Commission of India (CCI), the Securities and Exchange Board of India, stock exchanges, IP-1 and Corporate Registration. It now needs to get the go-ahead from its lenders and the National Company Law Tribunal (NCLT). NCLT will take up the proposal on June 28.
Late December, Brookfield had agreed to buy 100% equity in TowerCom Infrastructure, a company in which RCom has hived off its telecom towers. Once completed, RCom will receive Class B non-voting shares in the new tower company, providing 49% future economic upside in the tower business based on certain conditions, which means that the telco will enjoy certain information and other rights, but will not be involved directly or indirectly in the management and operations of the new company.
In early June, RCom got a seven-month breather on all its debt payments from bankers. The joint lenders' forum (JLF) allowed RCom a 'standstill' for the period, during which the company won't need to service loans nor will it accrue interest on bank borrowings.
Chairman Anil Ambani has said that if the company finds its outstanding debt unsustainable despite the sale of towers and the Aircel deal, it may consider offloading the remaining overseas business held under the Global Cloud Exchange banner, comprising undersea cables, or pare some of its 50% in Aircom – the JV with Aircel - or even sell its remaining 49% economic interest in the tower arm. The Union Cabinet may next week consider Canada-based Brookfield Infrastructure Partners’ investment proposal worth Rs 11,000 crore to buy 51% interest in Reliance Communications’ tower business, people familiar with the matter said.
Brookfield Infrastructure’s investment is considered the single-largest investment in the telecom infrastructure space in India. It will be the largest ever investment in the infrastructure space in India. Brookfield Infrastructure has funds under management to the tune of $250 billion.
A clearance from the Cabinet will be a big step towards the Anil Ambani-owned telco getting Rs 11,000 crore, which will be used to repay lenders. The company has committed to repay most of its debt of around Rs 45,000 crore by September 30.
RCom, which has defaulted on its loan servicing obligations with more than 10 local banks, also hopes to complete its deal to merge wireless business with Aircel by September 30, which will help reduce its debt by another Rs 14,000 crore.
The debt has been at the heart of a slew of ratings downgrades amid huge pressure on the shares of the telecom company, which posted its first-ever annual loss in the last fiscal year amid plunging revenue because of intense competition.
RCom stock ended 1.9% lower at Rs 18.05, after touching a record low of Rs 17.95 intra-day on Tuesday on BSE.
RCom declined to comment on the development.
All investment proposals of Rs 5,000 crore and above now need to be cleared by the Union Cabinet as the government has scrapped the Foreign Investment Promotion Board.
The RCom's deal with Brookfield has already received approvals from its shareholders, Competition Commission of India (CCI), the Securities and Exchange Board of India, stock exchanges, IP-1 and Corporate Registration. It now needs to get the go-ahead from its lenders and the National Company Law Tribunal (NCLT). NCLT will take up the proposal on June 28.
Late December, Brookfield had agreed to buy 100% equity in TowerCom Infrastructure, a company in which RCom has hived off its telecom towers. Once completed, RCom will receive Class B non-voting shares in the new tower company, providing 49% future economic upside in the tower business based on certain conditions, which means that the telco will enjoy certain information and other rights, but will not be involved directly or indirectly in the management and operations of the new company.
In early June, RCom got a seven-month breather on all its debt payments from bankers. The joint lenders' forum (JLF) allowed RCom a 'standstill' for the period, during which the company won't need to service loans nor will it accrue interest on bank borrowings.
Chairman Anil Ambani has said that if the company finds its outstanding debt unsustainable despite the sale of towers and the Aircel deal, it may consider offloading the remaining overseas business held under the Global Cloud Exchange banner, comprising undersea cables, or pare some of its 50% in Aircom – the JV with Aircel - or even sell its remaining 49% economic interest in the tower arm. The Union Cabinet may next week consider Canada-based Brookfield Infrastructure Partners’ investment proposal worth Rs 11,000 crore to buy 51% interest in Reliance Communications’ tower business, people familiar with the matter said.
Brookfield Infrastructure’s investment is considered the single-largest investment in the telecom infrastructure space in India. It will be the largest ever investment in the infrastructure space in India. Brookfield Infrastructure has funds under management to the tune of $250 billion.
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