RCOM sells off telecom infra to GTL for $11 billion

Not long after the truce between India’s famous Ambani brothers – who own Reliance Communications (RCOM) and Reliance Industries Limited respectively – the younger brother, Anil Ambani, head of RCOM, has sold off his firm’s tower business to GTL Infrastructure for $11 billion. This is the first time a non-telco player has gained a foothold in the highly lucrative Indian telecom infrastructure business.

Sources suggest that over two million shareholders of RCOM and the minority shareholders of Rel Infratel are set to receive free listed shares of the merged entity. The sharing ratio between GTL Infra and RCOM would be 1:2 as part of the deal. The final announcement is expected to come in around three weeks.
The deal will be implemented through a demerger of Rel Infratel’s tower assets into GTL Infra. As RCR previously reported, the deal is also in line with RIL’s interest in the infrastructure business, and would add significant revenue for RCom, with RIL pumping billions into the project. The infrastructure already boasts some 50,000 towers in its portfolio, approximately 200000 Kms of fiber optic connecting more than one million buildings across 44 cities with over 1.4 million access lines and nine data centers.
Speculations in the market had for some time been indicating a possible partnership likely to be based on two main areas of infrastructure sharing in the form of fiber optic cables and towers to save costs and time. RCom got its pan India fiber optic base and towers from Reliance Infocomm but in the recent past, RCom has been in high debt and low average revenues per user (ARPU).
Now, GTL gains the second spot in the Indian tower business by adding RCOM’s 50,000 towers, taking it to a total of 80,000 towers. The No.1 spot is retained by Indus Towers, a consortium business including leading telcos like Bharti Airtel, Vodafone and Idea Cellular. Indus owns over 100,000 towers.
All tenants have reportedly now been brought on board, including RCOM itself, as well as Aircel, Videocon Mobile, Tata Teleservices, Vodafone, Etisalat DB Telecom, MTS, S Tel and  Uninor Telecom.
The deal is also meant to meet the future needs for telecom infrastructure across the country, especially considering the increasing number of players in 2G, winners of 3G and BWA spectrum.