Carlyle, Blackstone in separate talks over Reliance Infratel
The Carlyle Group and The Blackstone Group are in separate talks with Reliance Communications concerning an investment in its telecom tower unit. A deal for Reliance Infratel could come in February or March, subject to agreements on its valuation.
Reliance Communications, which owns about 95% of the tower unit, said the transaction is progressing well, without identifying the bidders, The Wall Street Journal reported. According to people familiar with the situation, an agreement has yet to be reached on the valuation of the asset as well as on lease arrangements that Reliance Infratel has with other telecom operators.
Reliance Infratel has been courting investors for some time. One year ago, Reliance Communications put the asset up for sale, but there were no takers. It then tried to spin it off through a public listing, again to no effect. The holding went on the block earlier this year but offers didn't match expectations.
Carlyle and Blackstone were linked to the asset last summer, alongside the likes of Advent International and Apax Partners as well as strategic investors American Tower, Crown Castle International, Viom Networks and Etisalat. In September, it was reported that the two private equity firms were in exclusive negotiations with Reliance Communications, with more than 50,000 towers poised to sell for $3-3.5 billion.
This would be India's largest ever private equity deal, surpassing the $1 billion Temasek Holdings, Investment Corp. of Dubai, Goldman Sachs, Macquarie, AIF Capital, Citigroup and India Equity Partners paid for a stake in Bharti Infratel, the tower unit of Bharti Airtel, in 2007.
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.
The driver of this activity is the competition mobile tower operators face in India, which dampens returns.
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