The Hindu : National : RCom, GTL Infrastructure in Rs.50,000-crore deal

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National

RCom, GTL Infrastructure in Rs.50,000-crore deal

Special Correspondent

To create world's largest independent telecom infrastructure company

Reliance Infratel's tower assets will be merged with GTL Infrastructure
But RCom will continue to own the 200,000-km fibre optic network

MUMBAI: The Reliance Communications (RCom) and its subsidiary, Reliance Infratel, have entered into a Rs.50,000-crore ($11 billion) deal with GTL Infrastructure to create the world's largest independent telecom infrastructure company that will be neither owned nor controlled by a telecom operator.

Under the deal, which has the in-principle approval of the Board of Directors of all the three companies, the tower assets of Reliance Infratel will be merged with GTL Infrastructure.

According to a statement from the Reliance Communications, the company will continue to own Reliance Infratel's 200,000-km fibre optic network and related assets, India's largest optic fibre network.

The quantum of cash infusion into the RCom and the share swap ratios for the RCom and Reliance Infratel minority shareholders will be finalised in due course with the help of independent valuers and advisors.

The transaction, subject to necessary approvals and customary due diligence, is expected to be closed in the next six months.

The deal is likely to result in substantial unlocking of value, through cash infusion into the RCom: it may substantially reduce its consolidated gross debt and improve leverage ratios, contributing to enhanced financial flexibility and the receipt of free listed shares of the merged entity by more than 2 million shareholders of the RCom and the minority shareholders of the Reliance Infratel.

On completion of the deal, the merged entity will have more than 80,000 towers and 1,25,000 tenancies from more than 10 telecom operators, including the Reliance Communications, Aircel, Etisalat DB Telecom, MTS, Uninor Telecom, Videocon Mobile, Tata Teleservices, Vodafone and S Tel.

The merged entity will also have a firm option of 75,000 more tenancies from leading players.

The interests of the RCom as the largest tenant of the merged entity would be adequately protected through contractual arrangements, the statement said.

The Reliance Infratel is also proposing to make an initial public offering (IPO) of its equity shares and has filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI).

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