Reliance Comm may have to lower tower value

NEW DELHI: India's Reliance Communications may have to lower the value of its tower assets being sold to GTL Infrastructure in view of a likely stake sale in the No. 2 Indian mobile operator to Abu Dhabi's Etisalat, the Economic Times reported.

Citing an unnamed person familiar with developments, the newspaper said the reduction in valuation of the tower assets could range between Rs.25-40 billion , though that would not prevent the tower deal from going ahead.

Reliance Comm and GTL have not disclosed detailed financial terms of the deal but have said the combined operations would have an enterprise value of over $11 billion and would own more than 80,000 towers .

Etisalat, which currently owns a stake in an Indian start up telecoms firm, will have to exit the venture if it wishes to buy into Reliance Comm as Indian rules do not permit one company to own more than 10 percent in two telecom operators, the paper said.

That could mean the end of a 10-year, 100 billion rupees contract from the Etisalat-owned start up to lease towers from Reliance Comm, leading to the valuation impact on the tower deal, the paper said. It cited an unnamed industry expert saying the start up firm would likely be dissolved if it does not get another investor.

A Reliance Comm representative told the paper that the query on any possible valuation impact from Etisalat exiting the start up venture was highly premature and that Reliance Comm would not comment on speculation.