Brookfield pays ₹25,215 crore to take control of RJio’s tower assets

Canadian asset manager Brookfield has agreed to invest ₹25,215 crore to take control of Mukesh Ambani-led Reliance Jio Infocomm’s tower infrastructure.

RJio’s tower assets were transferred to a special purpose vehicle — Reliance Jio Infratel Pvt Ltd (RJIPL). Separately, a tower infrastructure trust was registered, sponsored by Reliance Industrial Investments and Holdings. The tower InvIT held 51 per cent stake in RJIPL and the balance 49 per cent was held by Reliance Industries. Post the deal with Brookfield, the stake held by RIL in RJIPL will be transferred to the tower InvIT. All units of the InvIT will be owned by Brookfield only.

“This will be the largest foreign investment from an Indian infrastructure vehicle standpoint. It also validates the value creation we had earlier talked about by spinning off the passive infrastructure, and it’s also a testimony to the quality of the asset,” Reliance Industries Ltd Joint Chief Financial Officer V Srikanth said in a press conference.

RJio, a wholly-owned subsidiary of Reliance Industries Ltd (RIL), has 1.75-lakh towers (both built and under-development), with an average age of less than two years. The company, effective March 31, 2019, had transferred the fibre and tower undertaking to Jio Digital Fibre Pvt Ltd (JDFPL) and RJIPL, respectively.

"Proceeds from the investment by Brookfield will be used to repay certain existing financial liabilities of RJIPL and acquiring the balance 49 per cent of equity share capital of RJIPL, currently held by RIL,” it added.

Stating this as the first in a set of asset monetisation plans, Srikanth said the company is in “extensive discussions” for the fibre assets also.

Both JDFPL and RJIPL are operating as independent entities with transfer of control to SEBI-registered Infrastructure Investment Trusts (InvITs). RJIPL’s towers are predominantly ground-based with ability to host multiple tenants, fibre backhaul and battery back-ups.

RJio earnings up

RJio posted a net profit of ₹891 crore for the quarter ended June 30, a 45.6 per cent increase from ₹612 crore recorded during the same period a year ago. The company’s user base stood at 331.3 million as of June 30, 2019, while it had the lowest churn in the industry at 0.97 per cent per month.

“Growth in RJio mobility services has continued to surpass all expectations. In less than two years of commercial operations, RJio network carried almost 11 exabytes of data traffic during the recently concluded fiscal quarter,” Mukesh D Ambani, Chairman and Managing Director at RIL, said.

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