Mumbai/Hong Kong: A buyout group including TPG Capital that is bidding for Indian billionaire Anil Ambani’s wireless tower business has valued the assets more than a quarter below an initial estimate, people with knowledge of the matter said.

TPG and Tillman Global Holdings LLC have signalled they view the assets as worth about 150 billion rupees (Dh8.2 billion, $2.2 billion), including debt, after conducting due diligence on Reliance Communications Ltd’s tower assets, down from the 215 billion rupees proposed earlier in the negotiations, according to the people. There’s no certainty the talks will result in an agreement, the people said, asking not to be identified as the information is private.

Reliance Communications said the bidders have not reduced the enterprise value for the tower business by that amount. “The valuation being discussed for monetisation of our tower business is in line with recent comparable transactions,” Reliance Communications said in an emailed response.

The firms are also considering scrapping a separate proposed purchase of Reliance’s domestic fibre-optic assets, according to the people. The Indian operator was seeking a valuation of at least 80 billion rupees for the backbone network, the people said.

Reliance Communications, reiterating its December 4 statement, said in the email that the sale of the fibre-optic business to the private equity firms “would be explored in a separate and independent transaction after the tower deal is finalised.”

Cutting debt

The reduced offer, which would still be the biggest private-equity deal in India, is a setback for Ambani’s Reliance, whose net debt stood at 404.8 billion rupees at the end of last year, company filings show. The company wants to reduce debt by no less than 300 billion rupees, it said in the email.

Reliance Communications rose 0.6 per cent to 55.35 rupees in Mumbai. The stock has declined 37 per cent this year, compared with the 5.6 per cent drop in the benchmark Sensex index.

Tillman Founder Sanjiv Ahuja didn’t immediately respond to an email seeking comment, while Luke Barrett, a spokesman for TPG, declined to comment.