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Reliance Jio Infocomm (RJio), a wholly-owned subsidiary of Reliance Industries Ltd (RIL), has received the Department of Telecommunications’ (DoT) approval to sell units worth Rs 25,215 crore in Tower Infrastructure Trust to Canadian asset management firm Brookfield Infrastructure Partners.
The telecom licensor also approved a downstream foreign investment of Rs 105.35 crore for the acquisition of the remaining 49 per cent equity in Reliance Jio Infratel Pvt Ltd (RJIPL) and increase the foreign capital in the firm to 100 per cent, sources close to the development said.
RJIPL, also a wholly-owned subsidiary of RIL, is the sponsor of the tower trust.
Separately, the markets regulator SEBI has approved the deal, with certain clauses, sources added.
The conditions for further hike in stakes includes compliance with Infrastructure Investment Trusts (InvITs) regulations, investment of Rs 25,215 crore by Brookfield and other investors and compliance with RBI guidelines, among others. The DoT’s approval is also subject to foreign investors not being provided any assured return on exit, they said.
On July 19, 2019, Brookfield had agreed to invest Rs 25,215 crore to take control of Reliance Jio Infocomm’s (RJio) tower infrastructure. RJio’s tower assets were to be transferred to a special purpose vehicle, Reliance Jio Infratel Pvt Ltd (RJIPL).
Separately, a tower infrastructure trust was to be registered, sponsored by a wholly-owned subsidiary of RIL, Reliance Industrial Investments and Holdings (RIIH).
READ THE STORY: Brookfield pays Rs 25,215 crore to take control of RJio’s tower assets
The companies had signed a binding deal in December.
ALSO READ: Reliance unit signs binding deal with Brookfield for Rs 25,215 crore investment
This week, providing its approval to the deal, SEBI had also sought certain clarifications.
In its reply, RIL also assured that the investment was in compliance with the InvIT rules and the use of the proceeds are not in contravention of any rules.
As of July 2019, RJio had about 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.
The tower assets were created by RJio using RIL’s funds and third-party loans. The deal with Brookfield was earlier approved by the National Company Law Tribunal (NCLT).
The tower company had earlier said the proceeds from Brookfield investment will be used to repay certain existing financial liabilities of RJIPL and acquire the balance 49 per cent of equity share of RJIPL, currently held by RIL.
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