RCOM, GTL Infra strike Rs 50,000-crore telecom tower deal

3 July 2010 No Comment

Reliance Communications Ltd (RCOM), and its subsidiary Reliance Infratel Ltd (RINFRATEL) and GTL Infrastructure Ltd (GTL Infra) agreed for a Rs 50,000-crore ($11 billion) deal to create the world’s largest independent telecom infrastructure company, neither owned nor controlled by any telecom operator, said a company release. This transformational deal will be implemented through a demerger of RINFRATEL’s tower assets into GTL Infra.

India’s largest optic fibre network of over 200,000 kms and related assets presently, owned by RINFRATEL will remain under RCOM’s ownership.

As per the deal, RCOM will receive cash infusion leading to substantial reduction of its consolidated gross debt and improved leverage ratios, contributing to enhanced financial flexibility. Again, over over 2 million shareholders of RCOM and the minority shareholders of RINFRATEL are to get free listed shares of GTL Infra.

Details on the cash infusion to Reliance Comm, and the share swap ratios will be finalised in due course, the statement said.

The merged entity will have over 80,000 towers and over 1,25,000 tenancies from over 10 telecom operators such as Reliance Communications, Aircel, Etisalat DB Telecom, MTS, Uninor Telecom, Videocon Mobile, Tata Teleservices, Vodafone, S Tel In addition, the merged entity will have a firm option on additional 75,000 tenancies from leading players.

Based on developments in the Indian telecom sector, including inter alia the likely future demand for telecom infrastructure across the country from 14 players in 2G, and winners in the recent auction for

3G (9 players) and BWA (Broadband Wireless Access – 8 players), the merged entity is expected to derive substantially higher tenancy ratios, apart from scale benefits and operational synergies.

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