Canadian alternative asset manager Brookfield will pay less than the amount originally agreed for a 51 per cent stake in Reliance Communications Ltd’s (RCom) mobile tower arm after merger talks between the Anil Ambani-controlled telecom firm and Aircel Ltd fell apart.
“RCom and Brookfield are in discussions on the tower arm stake sale and are deeply engaged. The final deal value will be different due to the lack of additional Aircel tenancies, which would have come in, and will be announced in the next few weeks,” Punit Garg, president (telecom business) and executive director of RCom, said in an interview.
In one of the biggest foreign direct investments in India, the Canadian firm Brookfield had agreed to pay RCom upfront cash of Rs 11,000 crore for the majority stake in Reliance Infratel Ltd.
However RCom said in a regulatory filing on Sunday that the merger agreement with Aircel was allowed to “lapse by mutual consent”, due to regulatory delays and opposition from some creditors. In its filing to stock exchanges, the firm said it is looking at alternatives to reduce debt, including sale of real estate assets and “optimization of spectrum”.
RCom, which had signed binding agreements in September 2016 for the merger of its wireless assets with Aircel, was expecting a transfer of Rs 14,000 crore of debt to the merged entity. The merger would have created one of India’s biggest telcos with ownership resting equally with RCom and Malaysian firm Maxis Communications.
The payment revision comes as RCom reels under a debt of over Rs 45,000 crore. In June, RCom’s lenders had invoked strategic debt restructuring (SDR) clauses for the firm which allows lenders to convert debt into equity in case of non-repayment.
The banks, however, allowed RCom to defer repayments till December on assurances that the stake sale of the telecom tower business and merger of its wireless assets with Aircel will free up enough cash for debt servicing.
Among its other creditors, Ericsson India has filed insolvency petitions against RCom and two of its subsidiaries before the National Company Law Tribunal (NCLT) in Mumbai, seeking its intervention for recovering dues to the tune of Rs 1,154 crore from RCom and subsidiaries Reliance Infratel and Reliance Telecom Ltd.