Reliance Communciation and GTL Infra close deal at $ 11 billion
This move will make GTL Infrastructure world's second largest telecom infrastructure company which is not held or controlled by any telecom service provider. The No. 1 company till date is Indus Towers.
SHARES OF Reliance Communication and GTL Infrastructure soared to 6.4 % and 8.60 % respectively after the former, India's No.2 cellular service provider decided to sell cellular towers business to GTL Infrastructure. The financial conditions of the deal was not disclosed but it is assumed that the joint operations will have an enterprise value of more than $11 billion or Rs 50,000 crore. GTL on the other hand will own more than 80,000 towers with about 1,25,000 tenancies from over 10 mobile operators.
The board of directors from the Anil Ambani powered RCOM, which also included members from its subsidiary, Reliance Infratel and GTL Infrastructure signed along the dotted line. RCOM, a flagship entity of the the Reliance ADAG group has debt of Rs 33,000 crore. This deal will diminish the debt by $3.9 billion. In order to cover up its remaining debts, RCOM is vying hard to sell a 26 percent stake in the company. So far, Abu Dhabi's, Etisalat has openly said that it is contemplating a deal with RCOM. A research note from Deutche Bank said,” While the announced deals would help in strengthening the balance sheet, RCOM's key challenge is to profitably grow its revenues” .
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