RCom, GTL Infra ink Rs 50,000cr tower deal
The Boards of Reliance Communications Ltd. (RCOM), and its subsidiary, Reliance Infratel Ltd. and GTL Infrastructure Ltd. (GTL INFRA) Sunday in-principle approved a Rs. 50,000 crore (USD 11 billion) deal to create the world’s largest independent telecom infrastructure company, neither owned nor controlled by any telecom operator.
On June 23, CNBC-TV18, quoting VCC Circle had reported that GTL Infrastructure and Reliance Infratel are in talks to merge their tower operations.
The transformational deal will be implemented through a demerger of RINFRATEL’s tower assets into GTL INFRA. Reliance Infratel will demerge its tower assets into GTL Infra fibre optic network. The related assets will however remain with RCOM.
With this deal, RCOM will receive cash infusion which will be utilised for substantial reduction of its debt. About 2 million RCOM shareholders will receive free listed shares of GTL Infra.
The merged entity will have over 80,000 towers and about 125,000 tenancies from over 10 telecom operators. The entity will also have a firm option of an additional 75,000 tenancies.
The independence and neutrality of the merged entity is expected to act as a catalyst to attract additional tenancies from 2G, 3G and BWA players.
Further details of the quantum of cash infusion to RCOM, and the share swap ratios for RCOM and Reliance Infratel’s minority shareholders will be finalised in due course with the help of independent valuers and advisors.
The proposed transaction is subject however to receipt of all necessary approvals, customary due diligence, definitive documentation, etc. It is anticipated that, barring unforeseen circumstances, the transaction will achieve final closing over the next 6 months.
On June 6, 2010, the RCOM Board had separately in-principle approved a proposal for induction of strategic and/or private equity investors for a 26% shareholding in the Company at an appropriate premium to the prevailing market price, and/or appropriate consolidation/combination options, and those discussions are continuing.
Source : Money Control
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Category: Stock-News
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