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GTL may consider $3 bn towers stock issue

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CIOL Bureau
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MUMBAI, INDIA: GTL Infrastructure, which acquired the the tower business of Reliance Communications, may give new shares worth as much as $3 billion, more than triple its market value, to Reliance Communications (RCom) shareholders in exchange for the company's mobile-phone towers, said a Bloomberg report.

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GTL, based in Mumbai, may also assume about Rs 18000 crore ($3.9 billion) of RCom's debt, the report said citing two people familiar with the matter.

Reliance Communications (RCom), India’s second largest mobile operator, said on Monday that it has completed the deals to demerge the company's tower business into passive infrastructure vendor GTL Infra and acquire pay TV business of cable operator Digicable, over the last week.

The GTL deal would create the world's largest independent telecom infrastructure company, with an enterprise value of over $11 billion and more than 80000 towers.

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This is the second big ticket deal done by GTL infra in the passive infrastructure space. GTL previously acquired Aircel’s tower assets prior to the commencement of 3G auctions in India.

With the extra cash from the GTL deal, RCom expects to strengthen its position in the cellular services front, by accelerating their deployments in 3G network infrastructure and services.

Also, the entry of RCom in the cable TV market may spur investments in digital cable networks thereby enabling them to effectively deal with competition from DTH players, RCom said in a statement.

The current Indian mobile landscape is characterized by falling revenues and profit margins. In the recent past, RCom’s ARPU and capital intensity experienced a steep drop. The tower deal with GTL is expected to help the company balance sheet and also aid continuing investments in network and service expansions.

RCom is still evaluating options for 26 per cent equity stake sale and there has already been a talk of the unlisted Reliance Globalcom and Reliance Tech Services evaluating similar such options to raise cash.

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