GTL - Reliance Communication - Relinace Infratel merger details

Reliance Communication (RCom) said on Sunday that it has agreed to sell its telecom tower business to GTL Infrastructure, a Mumbai-based listed company.

RCom's tower business is operated under a 95-per cent owned company - Reliance Infratel. Under the deal, the details of which are yet to be announced, Reliance Infratel will merge its tower business with GTL Infrastructure.

Reliance Infratel plans to raise Rs 5,000-crore through an IPO

To finance expansion plans

Reliance Infratel, the tower subsidiary of telecom service provider Reliance Communications (RCom), will reportedly file a draft red herring prospectus (DRHP) with Sebi within a week. Reliance Infratel plans to raise around Rs 5,000 crore through the proposed initial public offer (IPO). The company is looking at offloading a minimum of 10% stake in the IPO.

This would be second largest IPO after the last year's market meltdown, the biggest being the Rs 6,000-crore IPO by state-run National Hydroelectric Power Corporation (NHPC).

Last year, Reliance Infratel had got market regulator Sebi to approve its proposed IPO. However, fragile market conditions resulted in the company putting its IPO plans on hold.

The company will utilise the IPO proceeds for its expansion plans, including expansion of its portfolio of telecom towers and footprint.

RCom which holds a 95% stake in Reliance Infratel, presently has over 50,000 towers.

Reliance Infratel IPO to be deferred

Anil Ambani group firm Reliance Infratel is likely to defer its IPO plans as Sebi’s go ahead for the issue is set to expire soon, making it the third major IPO deferment after that of commodity exchange MCX and mutual fund house UTI AMC.
Sebi had issued observation on the IPO of Reliance Infratel, the telecom infrastructure division of Reliance Communications, on 12 May. As per the regulations, a company is required to close the IPO within 90 days of issuance of Sebi’s observation on the draft red herring prospectus (DRHP)—the period which ends on 11 August .
When contacted Reliance Infratel officials declined to comment.
Meanwhile, Reliance ADAG chairman Anil Ambani on 31 July had said, “We have received the approvals on the red herring prospectus... The volatility in global and Indian capital markets is what we are watching. A decision would be taken at an appropriate time.”
“When we find an appropriate time, I am sure that we will proceed both with Globalcom and Reliance Infratel,” Ambani added.
Reliance Infratel builds, owns and operates telecom towers and related assets at designated sites. It also offers these passive telecom infrastructure assets on a shared basis to wireless service providers and other communications service providers under long-term contracts.
Earlier, the IPO of MCX and that of UTI Asset Management, were deferred due to volatile market conditions.
MCX is believed to be reviving the process of its initial public offer and may file a new draft prospectus with the market regulator Sebi by the middle of this month.