Anil Ambani's Reliance Ends Talks to Sell Tower Assets to GTL
GTL Says Acquiring Reliance Infratel Assets Won't Take Place
Scott Eells/Bloomberg
Billionaire Anil Ambani would have cut debt at Reliance, his flagship company, and freed funds to invest in network upgrades after it spent 85.9 billion rupees this year to buy permits to offer high-speed wireless phone services.
Billionaire Anil Ambani would have cut debt at Reliance, his flagship company, and freed funds to invest in network upgrades after it spent 85.9 billion rupees this year to buy permits to offer high-speed wireless phone services. Photographer: Scott Eells/Bloomberg
Anil Ambani’s Reliance Ends Talks to Sell Tower Assets
Prashanth Vishwanathan/Bloomberg
A purchase would have more than doubled GTL’s number of transmission towers and created a company with an estimated value of 500 billion rupees ($11 billion).
A purchase would have more than doubled GTL’s number of transmission towers and created a company with an estimated value of 500 billion rupees ($11 billion). Photographer: Prashanth Vishwanathan/Bloomberg
Billionaire Anil Ambani’s Reliance Communications Ltd. ended talks to sell some assets to GTL Infrastructure Ltd. after both sides failed to agree on a deal to create India’s second-largest operator of mobile-phone towers.
A non-binding agreement in June expired Aug. 31 and neither side is extending the deadline, GTL said in a filing to the Bombay Stock Exchange today. Reliance has begun discussions with other potential investors and is also considering an initial public offering of the tower unit, called Reliance Infratel Ltd., it said in an e-mailed statement, without specifying names.
A purchase would have more than doubled GTL’s number of transmission towers and created a company with an estimated value of 500 billion rupees ($11 billion). Reliance Communications, India’s second-largest wireless operator, fell in Mumbai trading on concern the collapse of the deal will undermine the company’s ability to reduce debt.
“This deal was important for Reliance Communications,” said Jigar Shah, an analyst at Kim Eng Securities India Pvt. in Mumbai. “If it’s not going through, they need a backup plan.”
Reliance Communications dropped 0.3 percent to 162.85 rupees at the 3:30 p.m. close in Mumbai. GTL rose 1.3 percent to 45.80 rupees.
Vikas Arora, a spokesman for GTL in Mumbai, declined to elaborate on today’s statement. GTL agreed to buy about 50,000 transmission towers from Reliance in exchange for cash and stock, the companies said in June.
Public Offering
GTL was to have given new shares worth as much as $3 billion, more than triple its market value, to Reliance Communications shareholders and assume about 180 billion rupees in debt for the tower assets, two people familiar with the matter said in July.
A purchase would have increased GTL’s number of transmission towers to about 80,000 from 33,000. GTL in January bought 17,500 towers from Aircel Ltd. for 80.3 billion rupees.
Reliance said it can’t disclose why the deal with GTL collapsed, citing confidentiality agreements. It’s now pursuing a similar transaction that would result in a “significant” reduction of debt, the company said.
Ambani’s Reliance, which has said it plans to sell a 26 percent stake in itself for an “appropriate” premium, said in June the tower sale would lead to a reduction of debt. Emirates Telecommunications Corp. Chairman Mohammed Omran said the same month that investing in Reliance is among options the United Arab Emirates company is considering to expand in India.
Reliance’s debt exceeded cash and equivalents by 284 billion rupees as of the end of June, according to the phone operator. The company also paid 85.9 billion rupees for the right to use third-generation spectrum in a recent government auction of airwaves.
Assets of Reliance Infratel include an optical-fiber cable network of 190,000 kilometers, according to a June 16 report from HDFC Securities Ltd. Tata Teleservices Ltd., NTT DoCoMo Inc.’s Indian partner, and Uninor, a venture between India’s Unitech Ltd. and Norway’s Telenor ASA are among Infratel’s customers.
To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net.
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