Blackstone, Carlyle near Reliance tower acquisition - report
A consortium comprised of The Blackstone Group and The Carlyle Group may purchase Reliance Group’s cellular towers by December, in a deal that will finally see the Indian communications major divest its ailing tower assets.
The Times of India reported that Blackstone and Carlyle are in exclusive negotiations with Reliance, and may value the more than 50,000 towers at $3.5 billion. A source told the newspaper that the consortium offered a base price of $3 billion. If the assets fetch more than that, the transaction may become the largest PE deal in India to date.
Blackstone is expected to be the lead investor in the deal.
Earlier reports suggested that strategic investors American Tower, Crown Castle International, Viom Networks and Etisalat were also potential bidders, as well as a consortium comprised of Apax Partners.
This is the latest attempt by Reliance Communications to divest a stake in the company. Last year, it sought to sell a 26% stake without success and an attempt to spin off the company in a separate public listing also failed. Reliance Communications put its tower operator back up for sale in May. The company later said it received several informal offers, but these were rejected on the grounds of valuation differences.
Reliance Infratel has reported eight consecutive quarters of falling margins, and as of last month, its stock was down 48% for the year. These losses have been attributed to competition in the market driving prices down, coupled with high operating costs.
Reliance is not the only Indian cellular tower operator to struggle to offload its assets. TPG Capital and Farallon Capital are among those said to be interested in GTL Infrastructure, which is struggling with cost pressures after acquiring mobile phone operator AirCel's towers last year for $1.9 billion. Tower Vision has put its 8,000 towers up for sale at $125,000 apiece while Bharti Airtel has voiced plans to sell a stake in its tower arm, Bharti Infratel, which received funding from KKR in 2008.
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