Reliance puts tower arm on block

Nicole McCormick
16 Jun 2010

Debt-stricken Reliance Communications (RCom) is in advanced talks with several domestic and international investors to sell its tower arm Reliance Infratel.

The boards of RCom and Reliance Infratel agreed in-principle on June 14 to spin off the tower firm through a “demerger and/or other suitable value-creating options.”

The move will facilitate the creation of the “world’s largest independent telecom infrastructure company” not owned or controlled by a telco, said RCom, which owns 95% of Reliance Infratel.

“RCom and [Reliance Infratel] are at an advanced stage of discussions with several domestic and international strategic and financial players to finalize the proposal,” Reliance said.

A deal will be announced “shortly” and will consist of a combination of cash and stock.

The cash infusion will lead to a “substantial reduction” of RCom’s $6.2 billion debt burden, said the firm.

Angel Broking estimates that Reliance Infratel, which consists of 54,000 towers, could be worth around $5.4 billion.

Separately, RCom remains in talks to sell a 26% stake in the firm, with the proceeds to help reduce its debt and provide network capex.

Until last month’s truce between RCom and sister firm Reliance Industries, RCom had refrained from selling major assets since RIL held first right of refusal.

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