Number Of Rcl Towers May Go Up To 25,000

[@ksh@T 20]

MUMBAI: Reliance Communications plans to transfer the towers used for wireless communications into a separate 100% subsidiary and cede a small stake in it to American Towers.

The proposed subsidiary along with American Towers will take over the complete management, operation and maintenance of these towers. They will no longer be on RCL’s balance sheet. The subsidiary will also generate revenues of its own by leasing out the towers to other operators.

The company now has about 15,000 towers across the country. It is planning to build another 10,000 more taking the number to about 25,000. Sharing infrastructure is a normal process in the telecom industry. Recently, RCL itself announced an agreement to share ‘passive infrastructure’ with Hutchison and Idea Cellular.

The Boston, Massachusetts-based American Towers owns and operates about 30,000 wireless and broadcast communication sites across the country. It leases out the sites to telecom operators who pay a fixed fee to the company. This reduces the cost and burden to service providers who don’t have to bother about building and maintaining thousands of towers across a country. For the infrastructure operator like American Towers, it provides a steady stream of income especially in a growing market.

An RCL spokesperson declined comment on the move. But people close to the development said that the company is in advanced stages of approving the proposal. RCL would continue to hold a substantial stake in the proposed subsidiary. American Towers is expected to hold about 20-25%. A team from American Towers was in Mumbai recently to discuss the deal with RCL officials.

The move comes at a time when RCL is expanding in both CDMA and GSM. It operates GSM-based services in eight circles and has applied for spectrum in additional circles including Delhi, Mumbai, Chennai, Uttar Pradesh east and west and Jammu & Kashmir.

Experts believe that future expansion can be carried out at a lower cost because of sharing of ‘passive infrastructure’. The subsidiary’s cash flows will fund the setting up of towers and along with American Towers will be in charge of operation and maintenance.

Another benefit to RCL could be valuation. Setting up 10-15,000 towers across the country would require an investment of about Rs 10,000-12,000 crore. RCL’s towers including the proposed ones of about 25,000 could attract a valuation of about $3-4bn at a conservative estimate, experts believe.

Source: http://economictimes.indiatimes.com/articleshow/287257.cms

[@ksh@T 20]

Temasek eyes big stake in RCL's TowerCo

JOJI THOMAS PHILIP & CHAITALI CHAKRAVARTY

TIMES NEWS NETWORK[ WEDNESDAY, NOVEMBER 15, 2006 01:54:02 AM]

NEW DELHI: Singapore’s state investment arm Temasek is in talks with Reliance Communications (RCL) to pick up equity in TowerCo, its proposed 100% subsidiary, which will hold all wireless towers and other related telecom infrastructure. If the deal goes through, it could be one of the largest private equity deals in the country.

According to sources, RCL is looking to divest 25-30% stake in TowerCo, and Temasek is one of the front-runners to acquire stake in the company. There’s also a possibility of multiple financial investors picking up stake. Sources told ET the deal-size could go up to $1-bn, although this could not be verified.

RCL has already said it would offload 5-10% stake in TowerCo to Boston-based American Tower Corporation (ATC), the world’s largest telecom tower management company. If the talks lead to something fruitful, Temasek will be the second foreign investor in the company. While ATC is a strategic investor, Temasek, will purely be a financial player, sources added.

When contacted, an RCL spokesperson told ET, “The tower business of Reliance Communications is being transferred to a 100% subsidiary and the company is committed to unlock value for the benefit of our 2m shareholders.” Temasek MD Manish Kejriwal said, “No comments,” when asked to confirm the development.

Reliance Communications has about 15,000 cell sites (towers) and plans to add another 10,000. Recently, the RCL board approved the transfer of the existing and future wireless towers (CDMA and GSM) to TowerCo. The Anil Ambani company also said TowerCo, would be run “with independent financing, thereby reducing capex requirements and leveraging the company’s own balance sheet”.

In fact, RCL has also said some of the factors that led to its board approving the hive-off include the multi-billion dollar valuations such global tower companies enjoy and India’s low ARPUs (average revenue per user), which require the most efficient capital investment and financing structure.

Internationally, tower management companies have been highly successful . Globally, this is an emerging business model with cell cites and other related infrastructure being owned by third parties, who lease out the same to multiple service providers.

American Tower Corporation, which has close to 30,000 towers spread across North and Latin America has a market capital of $15.04-bn. Crown Castle International with a market cap of $6.6-bn, is the world’s second-largest tower management company which owns and manages about 12,800 cell sites.

Sharing telecom infrastructure as a concept has caught on in India and industry sources estimate that up to 30% of the 70,000 towers in the country is currently being shared by the service providers.

[abhay 0]

RCL seeks investor okay for separating business

Reliance Communications (RCL) has called an extraordinary meeting of its shareholders on January 27 to seek approval for demerging its business operations and passive infrastructure into three companies.

The company is demerging the passive infrastructure such as towers and optic fibre cables of Reliance Communications (RCL) and Reliance Telecom (RTL) into Reliance Telecom Infrastructure (RTIL). RTIL will be a subsidiary of RCL through Reliance Communications Infrastructure. RCIL will hold 99% of the paid up share capital of Rs 5 lakhs of RTIL.

RTIL will make a fresh issue of capital of Rs 100 crore to RCIL before the effective date of demerger, so that there is no change in the existing shareholding pattern.

After the demerger become effective the passive telecom infrastructure of RCL and RTL shall be considered transferred to RTIL. According to RCL communication to shareholders, RTIL and RTL are subsidiaries of RCL, and the objective is to restructure within the group of companies.

Hence, there is no need for any consideration to be paid for transfer of these assets. RTIL, of course, will create general reserves equivalent to the fair value of the passive infrastructure transferred to it.

RCL will also account for the transfer of these assets by recognising the difference between the book value and the fair value of the assets as a reserve for business restructuring. ET had earlier reported that RCL will be hiving off its passive infrastructure and is looking at divesting it in favour of financial investor like private equity funds.

http://economictimes.indiatimes.com/News/C...show/955955.cms

[abhay 0]

Reliance Communications shareholders approve demerger of wireless towers and infrastructure

Reliance Communications Ltd has announced that the equity shareholders of the Company at its meeting held on January 27, 2007 have approved a scheme of transfer of the existing wireless towers (CDMA and GSM) and related infrastructure of the Company, to its subsidiary, Reliance Telecom Infrastructure Ltd (RTIL) with an overwhelming majority of 99.99%, in value.

"This is the first of a series of initiatives we will be taking to remain asset-light, and enhance our competitiveness, ultimately leading to unlocking of further value for the benefit of our nearly 2 million shareholders", said Mr. Anil Ambani, Chairman of the Company, at the time of the board's approval to the scheme.

The demerger of passive infrastructure would benefit the stakeholders of the Company on account of:

- Enhanced financial flexibility and cost efficiency due to reduced set-up and operating costs.

- All new towers and related infrastructure will be set up by RTIL, with independent financing, thereby reducing capex requirements and leveraging on the Company's own Balance Sheet.

- Promote High value standalone business by conversion of cost- centric assets to revenue-centric ones by sharing passive infrastructure of RTIL with other wireless service providers

Under the scheme of transfer, more than 12,000 Towers shall be consolidated under RTIL.

http://www.equitybulls.com/admin/news2006/...det.asp?id=7297