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RCom-GTL tower business deal off

MUMBAI: Reliance Communications' (RCom) plans to sell its phone-tower assets to GTL Infrastructure fell through after both sides failed to agree on a deal by the deadline which was on August 31.

GTL Infrastructure, in a statement to the Bombay Stock Exchange, said, “The non-binding term sheet signed by both parties dated June 27, 2010, expired on August 31, 2010”.

“Despite efforts, both parties have neither extended the term sheet nor entered into any definitive transaction agreements as envisaged therein.

“Consequently, the process of merger as originally contemplated would not take place,” the company statement added.

On June 27, the boards of GTL, Reliance Communications and its subsidiary Reliance Infratel had given in-principle approvals to the Rs.50,000-crore ($11 billion) merger deal to create the world's largest independent telecom infrastructure company, neither owned nor controlled by any telecom operator.

Eyeing other investors

A statement from Reliance Communications said, “Following the expiry of the non-binding term sheet with GTL Infrastructure, Reliance Communications is now engaged in discussions with certain other strategic and financial investors, to pursue a similar transaction aimed at significant reduction in the company's debt and unlocking of value for RCom shareholders from the passive infrastructure and related assets in its 95 per cent-owned subsidiary, Reliance Infratel”.

Reliance Infratel is also proposing 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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