Reliance Infratel buyout on the rocks
The Carlyle Group and The Blackstone Group’s proposed buyout of Reliance Communications’ telecoms tower unit looks to be in a state of limbo as the Indian firm said the sale can only proceed following clarification from the regulatory authorities.
Despite having signed a term sheet to buy up to 95% of Reliance Infratel for INR150-200 billion ($3-4 billion) in February, the Reliance management has stalled the process by waiting on regulatory guidance on issues such as spectrum pricing and allocation. It is also said to have failed to have come to a firm agreement over the price of the asset with the private equity giants.
"The transaction will proceed further once clarity emerges," said Punit Garg, a president at the parent company.
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.
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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