Brookfield eyes Jio’s ₹1.07L cr telecom assets in mega deal
Reeba Zachariah & Boby Kurian
Mumbai:08.02.2019
Brookfield Asset Management, one of the world’s top infrastructure and private equity investors, is in early talks to buy controlling shares in Reliance Jio’s telecom towers and fibre assets valued at over $15 billion (₹1.07 lakh crore), people directly aware of the matter said. The deal, if it happens, would be one of the largest M&As in India.
Jio, the telecom arm of India’s most valued company Reliance Industries (RIL), recently said it was spinning off tower and fibre into two separate entities, as part of an anticipated deleveraging exercise. RIL is keen on retiring and refinancing a chunk of its ₹3 lakh crore, or $40 billion, debt mostly soaked up to finance Jio’s disruptive roll-out.
Brookfield may become largest telecom infra player
Jio operates with a network of over 2.2 lakh towers, including third party ones, and around three lakh route kilometre of optic fibre, in serving a subscriber base fast approaching 300 million. Canada-based Brookfield, managing assets worth more than $330 billion globally, has been eyeing telecom infrastructure assets in Asia’s third largest economy for a while. Brookfield had purchased the loss-making East West Pipeline—a 1,400km pipeline connecting Kakinada in Andhra Pradesh to Bharuch in Gujarat—entity owned by Mukesh Ambani and family for $2 billion last year.
“Jio plans to take certain infrastructure assets out of the balance sheet as part of the de-leveraging exercise. It is exploring a deal with Brookfield to spin off assets which has the ability to carry huge debt when backed by long-term operating agreements,” aid a person familiar with the matter. Brookfield, which has built a rapport with RIL, along with its global sponsors are keen on a full acquisition, but details would be flushed out only as talks move forward. A potential stake buy in Jio’s assets could make Brookfield the largest telecom infrastructure player in the country. Brookfield was unavailable for comment. RIL didn’t respond to an email query sent on Wednesday till the time of going to press. Indus Towers, majorityowned by rival telcos Vodafone and Airtel, is merging with Bharti Infratel creating a $14 billion combine with 1.63 lakh towers. Private equity investor KKR and one of its sponsors Canadian Pension Plan Investment Board will hold 6% in the combined entity. KKR had bought into Bharti Infratel to trigger a $5 billion share purchase in the eventual combine, but the deal-making hasn’t progressed.
Jio’s infra assets could be valued anywhere between $12-15 billion depending on how it consolidates towers spread between its own, third party and those of the bankrupt Reliance Communications (RCom), which it was expected to buyout. Incidentally, Brookfield was close to acquiring Anil Ambani-owned RCom’s tower unit before the deal collapsed.
If the transaction with Brookfield gets completed, it will be a rare private equity deal within the broader RIL. In the past, the group has had a joint venture with New York-based DE Shaw for financial services.
Reeba Zachariah & Boby Kurian
Mumbai:08.02.2019
Brookfield Asset Management, one of the world’s top infrastructure and private equity investors, is in early talks to buy controlling shares in Reliance Jio’s telecom towers and fibre assets valued at over $15 billion (₹1.07 lakh crore), people directly aware of the matter said. The deal, if it happens, would be one of the largest M&As in India.
Jio, the telecom arm of India’s most valued company Reliance Industries (RIL), recently said it was spinning off tower and fibre into two separate entities, as part of an anticipated deleveraging exercise. RIL is keen on retiring and refinancing a chunk of its ₹3 lakh crore, or $40 billion, debt mostly soaked up to finance Jio’s disruptive roll-out.
Brookfield may become largest telecom infra player
Jio operates with a network of over 2.2 lakh towers, including third party ones, and around three lakh route kilometre of optic fibre, in serving a subscriber base fast approaching 300 million. Canada-based Brookfield, managing assets worth more than $330 billion globally, has been eyeing telecom infrastructure assets in Asia’s third largest economy for a while. Brookfield had purchased the loss-making East West Pipeline—a 1,400km pipeline connecting Kakinada in Andhra Pradesh to Bharuch in Gujarat—entity owned by Mukesh Ambani and family for $2 billion last year.
“Jio plans to take certain infrastructure assets out of the balance sheet as part of the de-leveraging exercise. It is exploring a deal with Brookfield to spin off assets which has the ability to carry huge debt when backed by long-term operating agreements,” aid a person familiar with the matter. Brookfield, which has built a rapport with RIL, along with its global sponsors are keen on a full acquisition, but details would be flushed out only as talks move forward. A potential stake buy in Jio’s assets could make Brookfield the largest telecom infrastructure player in the country. Brookfield was unavailable for comment. RIL didn’t respond to an email query sent on Wednesday till the time of going to press. Indus Towers, majorityowned by rival telcos Vodafone and Airtel, is merging with Bharti Infratel creating a $14 billion combine with 1.63 lakh towers. Private equity investor KKR and one of its sponsors Canadian Pension Plan Investment Board will hold 6% in the combined entity. KKR had bought into Bharti Infratel to trigger a $5 billion share purchase in the eventual combine, but the deal-making hasn’t progressed.
Jio’s infra assets could be valued anywhere between $12-15 billion depending on how it consolidates towers spread between its own, third party and those of the bankrupt Reliance Communications (RCom), which it was expected to buyout. Incidentally, Brookfield was close to acquiring Anil Ambani-owned RCom’s tower unit before the deal collapsed.
If the transaction with Brookfield gets completed, it will be a rare private equity deal within the broader RIL. In the past, the group has had a joint venture with New York-based DE Shaw for financial services.
No comments:
Post a Comment