According to reliable sources, Brookfield Asset Management, one of the world’s top infrastructure and private equity investors, is in talks to buy controlling shares in Reliance Jio’s telecom towers and fibre assets valued at over $15 billion. The deal, if it happens, would be the largest private equity action, besides being one of the largest M&A's in India. Jio, the telecom arm of Reliance Industries (RIL), recently said it was spinning off tower and fibre into two separate entities, as part of an anticipated de-leveraging exercise. RIL is keen on retiring and refinancing a chunk of its £30 billion debt mostly soaked up to finance Jio's disruptive roll-out.
Jio operates with a network of over 2,20,000 towers, including third party ones, and around 3,00,000 route km 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 1,400 km 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 source. 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.
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.
