Anil Ambani's Reliance Communications Ltd (RCom), its subsidiary Reliance Infratel Ltd and GTL Infrastructure Ltd have 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.
This transformational deal will be implemented through a demerger of Reliance Infratel Limited tower assets into GTL INFRA. "Together with the recent purchase of tower business of Aircel, the proposed merger of Reliance Infratel’s tower business will create substantial scale and opportunities to improve tenancy for GTL INFRA," GTL said in a release.
Upon closure of the transaction, the merged entity will have over 80,000 towers and over 1,25,000 tenancies from over 10 telecom operators such as RCOM, Aircel, Etisalat DB Telecom, Idea, Vodafone, Bharti Airtel, MTS, Uninor Telecom, Videocon Mobile, Tata Tele-services and STel. In addition, the merged entity will have a firm option of 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.
The details of the quantum of cash payout 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.
It is anticipated that the transaction will achieve final closing over the next 6 months.
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