RCOM consolidates Infrastructure business

MUMBAI, INDIA: Reliance Communications (RCom) Limited today announced consolidation of its Infrastructure business in Reliance Infratel Limited, a subsidiary of the company.

RCOM's Board of Directors has approved a scheme for consolidation of company'sOptic Fiber Division to Reliance Infratel Limited, a subsidiary company. This was informed in a letter to the Bombay Stock Exchange (BSE).

Reliance Infratel owns, operates and builds telecom infrastructure, primarily consisting of wireless communication sites and towers. Presently, the subsidiary owns all the towers used by RCom's CDMA and GSM wireless networks and is developing additional towers to meet the needs of RCOM and other customers, the letter said.

As the reason behind the consolidation move, the company pointed to the global trend of separating telecom infrastructure business to opt for best practices.

“The consolidation of Optic Fiber Division into Reliance Infratel reflects the global trend of segregating the telecommunication infrastructure business, with a view of adopting the best management practices and to identify the actual economic value add arising out of infrastructure business and telecommunication services businesses,” the letter stated.

Further, the company said that the consolidation move will enhance the stakeholders and provide overall flexibility with multiple benefits. The benefits include passive telecom infrastructure assets consolidated under one entity, single customer interface for better services and common marketing organizations.

Also, the consolidation will lead to synergies and cost efficiencies in terms of lower operating costs. This move will make Reliance Infratel integrated infrastructure services providers.

RCOM clarified that under the scheme, the company will not issue any additional equity shares and there's no proposed change in the company's capital structure. The proposed restructuring scheme would be subject to all requisite permissions, sanctions and approvals as may be required, the letter concluded.