RCom okays Rs 50,000 cr deal with GTL Infra


Prime VIP
New Delhi, June 27

Anil Ambani group today announced a Rs 50,000-crore deal to merge its telecom tower business with GTL Infrastructure, a move that would help RCom cut down its debts by more than half.

The Boards of RCom, its subsidiary Reliance Infratel Ltd., and GTL Infrastructure today in-principle approved 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, the company said in a statement.

RCom said the cash infusion and equity swap ratio would be decided in due course of time. Sources close to the deal said the deal would help RCom reduce its Rs 33,000-crore debt by Rs 18,000 crore.

The deal comes soon after the warring Ambani brothers called off their five-year-long dispute and scrapped the non-compete agreement between the two.

This transformational deal will be implemented through a demerger of Reliance Infratel’s tower assets into GTL Infra, it added.

India's largest optic fibre network of over 200,000 kms and related assets owned by Reliance Infratel will remain under RCom's ownership.

Elaborating on the deal structure, the company said the cash infusion into RCom will lead to substantial reduction of its consolidated gross debt and improved leverage ratios, which in turn would result in enhanced financial flexibility.

Besides, the two million shareholders of RCom would get free listed shares of the merged entity, the ratio for which will be decided soon.

"Details of the quantum of cash infusion to RCom, and the share swap ratios for RCom and Reliance Infratel minority shareholders will be finalised in due course with the help of independent valuers and advisors," an ADAG statement said.

Upon closing itself, 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 the developments in the Indian telecom sector, including inter alia, and 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.— PTI