The boards of Reliance Communications (RComm),its subsidiary Reliance Infratel (Rinfratel),and GTL Infrastructure on Sunday in-principle approved a Rs 50,000-crore ($11 billion) deal to create the worlds largest independent telecom infrastructure company,neither owned nor controlled by any telecom operator. Under the deal,RComm will merge Rinfratel with GTL infrastructure,a move that would infuse significant cash into the Anil Ambani firm and help it cut down its huge debt of Rs 33,000 crore by more than half. Before the merger,RComm had a 95% stake in Rinfratel.
The merged entity will have over 80,000 towers and over 1,25,000 tenancies from over 10 telecom operators such as RComm,Aircel,Etisalat DB Telecom,MTS,Uninor Telecom,Videocon Mobile,Tata Teleservices,Vodafone and S Tel. The entity is expected to see an additional 75,000 tenancies coming in from leading players,owing to the impending launch of 3G and broadband wireless access (BWA) in India. However,Rinfratels optic fibre network of over 200,000 kms and related assets will remain under RComms ownership,a company statement said. Sources said the merger deal between Rinfratel and GTL Infrastructure could bring down RComms liability by around Rs 18,000 crore (around $4 billion) through a mix of cash and stock options,possibly with a combination of about $1.5 billion (around Rs 6,750 crore) in cash. Considering GTL would take up the operational control,it is quite possible that it could take up the debt liability already existing on Rinfratel which was around Rs 15,000 crore as of March 31,2009,according to the DRHP filed by the company in September 2009.