RCom, Brookfield wrap up tower deal, sign term sheet

Reliance Communications has signed a term sheet with Brookfield Infrastructure Group for the sale of its tower assets and related infrastructure. RCom will receive an upfront cash payment of Rs 11,000 crore from the proposed transaction. The proceeds will be utilised to pare debt, RCom said in a statement on Friday. Ambit and UBS were advisors to Reliance Communications on the deal."Under the Term Sheet, the specified assets are intended to be transferred from Reliance Infratel Ltd. (RITL) on a going concern basis into a separate SPV, to be owned by Brookfield. RCom will continue as an anchor tenant on the tower assets, under a long term MSA, for its integrated telecommunications business," according to the statement. Commenting on the deal, Dilip Bhat, Joint Managing Director at Prabhudas Lilladher said, "The direction is certainly right that they (RCom) are trying to reduce their leverage, reducing the debt and to that extent, probably the whole deal looks pretty good from the RCom point of view."Below is the transcript of Dilip Bhat’s interview to Ekta Batra and Prashant Nair on CNBC-TV18.Ekta: Throwing this open to you. We are just getting news on Reliance Communication and you have heard us talk about it. Your first thoughts?A: This particular deal was expected for some time to materialise. That particular deal was expected in the sense that RComm is definitely looking for reducing its debt burden and some of the sale of assets also was very much expected. But just to comment immediately whether this particular deal is good enough, it is too skeletal a data for me to really comment whether this is adequate or not adequate. But the direction is certainly right that they are trying to reduce their leverage, reducing the debt and to that extent, probably the whole deal looks pretty good from the RComm point of view.Prashant: Actually the merger with Aircel etc system this is the actually the big one, right? This is the deal which will bring cash into the company? The market has been at a 52 week high the stock has been at a 52 week low. It is about Rs 47-48 so it is not reacting too much?A: Reliance Communication really offers a good opportunity on a long-term basis because they have taken all the right steps at the moment even in terms of their core business and even some of these assets which they can monetise and try to bring down the debt which in turn will be reinforce a lot of confidence in the management. I think some kind of re-rating is overdue for this particular company.Watch video for more...