By Debiprasad Nayak

MUMBAI--Reliance Communications Ltd. said on Wednesday that it has agreed to sell its tower assets to Brookfield Infrastructure Partners L.P. and its institutional partners for $1.6 billion.

The company, one of India's largest mobile services providers, said it will use the cash payment to reduce debt.

The merger of Reliance Communications' wireless business with another mobile operator Aircel, which was announced in September, and the latest sale of the tower business will together reduce its debt by $4.6 billion, or nearly 70%, the company said in a statement.

As part of the deal, Reliance Communications will receive Class B non-voting shares in the exited tower business, providing 49% "future economic upside," it added.

Most Indian telecom firms are saddled with heavy debt taken to buy spectrum at high prices even as intensifying competition has forced them to sharply lower tariffs.

Reliance Communications shares jumped 8.1% to 37.90 rupees on Mumbai's BSE stock exchange after the announcement of the deal.

Write to Debiprasad Nayak at debiprasad.nayak@wsj.com

(END) Dow Jones Newswires

December 21, 2016 02:54 ET (07:54 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.