Summit Digitel to raise Rs 11,836 cr, RIL may invest

Summit Digitel Infrastructure, established in 2020 through Brookfield’s acquisition of the ‘Passive Telecom Infrastructure Entity’ from Reliance Industries is raising Rs 11,836 crore via local bonds.

Reliance Industries will likely subscribe to the bonds, which will replace a long-term credit facility, a move that generally extends immediate repayment liabilities. This is a record fund-raising by bonds issued in one shot via private placement.

The bonds will mature in the next 11 years, offering put/call options in the first one-and-a-half years. Such options may be aimed at resetting interest rates while allowing the issuer/investors an exit route well before the scheduled maturity, bond dealers said.

The issue will likely open for subscription on Friday through electronic bidding platforms on the BSE and the National Stock Exchange.

“The proceeds of the issue are proposed to be used for redeeming existing secured redeemable non-convertible debentures… in part or in full,” Summit wrote in the Investment Memorandum, a copy of which is with ET. The debentures were issued for purposes including capital expenditure in connection with the tower business, it said.

Reliance and Summit Digitel, one of the country’s largest telecom infrastructure providers, did not reply to ET’s queries until press time.

Last October, Brookfield and a group of investors including Singapore’s GIC completed a deal to buy out Reliance Jio Infratel and renamed the company Summit Digitel Infrastructure.
In December 2019, Reliance Industrial Investments and Holdings Ltd., a wholly owned subsidiary of Reliance, had entered into a binding agreement with Brookfield Asset Management for an investment of Rs 25,215 crore in units proposed to be issued by the Tower Infrastructure Trust.

Local rating company Crisil rated those proposed bonds triple-A with a stable outlook. Each bond will have a face value of Rs 10 lakh and to be issued at par.

“The rating also reflects stable cash flows backed by a long-term master service agreement with RJIL and limited downside risks to profitability given the fixed-price terms of its project execution and operations & maintenance agreements,” Crisil said in a note in August, when the country’s economy came to a standstill following the virus-induced lockdown. “With expected rise in data usage over the medium term, demand for towers connected via optical fiber is likely to increase.”

During the first half of the current financial year, the company’s EBITDA has halved to about Rs 1,466 crore. Some of the company’s existing lenders include Bank of Baroda, Punjab National Bank, State Bank of India, HDFC Bank, Axis Bank, ICICI Bank and Union Bank of India.

Summit Digitel is in the business of setting up and maintaining passive tower infrastructure and related assets. The company had a pan-India portfolio of 137,175 operational towers as of January 31. Business Journal