Reliance Communications Shareholders Get Free Shares of Merged Entity with GTL Infra
The country’s second-largest wireless carrier, Reliance Communications (RCOM), on Sunday hived off its tower business to GTL Infrastructure for Rs 50,000 crore ($11 billion). The RCOM-GTL deal does not include the optic fibre network of over 200,000 km and related assets owned by Rel Infratel, which is to remain under RCOMs ownership.
As part of the GTL deal, over 2 million shareholders of RCOM and the minority shareholders of Rel Infratel are set to receive free listed shares of the merged entity. The swap ratio is expected to be in the range of 2-3 shares of GTL Infra for every one share of RCOM, and will depend on the quantum of debt that is reduced in Rel Infratel. A detailed picture would be available within the next three weeks.
Upon closing, the merged entity will have over 80,000 towers and over1,25,000 tenancies from over 10 telecom operators. The interests of RCOM as the largest tenant of the merged entity have been adequately protected through appropriate contractual arrangements, sources said.
Rel Infratel, meanwhile, is also proposing an initial public offering (IPO) and has filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI).
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Some leading brokerage house opined that RCOM-GTL deal is not in the interest of GTL Shareholders. I feel opinion is premature as exchange ratio / price details are still not available. Volumes in GTL counter suggests other view is possible.