Reliance Communications Ltd has invited proposal from investments banks to monetise assets of its tower unit Reliance Infratel within the current year ending March 31, 2016, it disclosed late on Wednesday.
The move is part of Anil Ambani-controlled firm’s strategy to divest assets to reduce its debt and focus on its core business.
“The company keeps exploring and analysing various strategic alternatives. As one of such alternatives, it has invited certain investment banks to make proposals for running a process to monetise the valuable tower and fiber assets held in its subsidiary, Reliance Infratel,” it said in a stock market filing.
The telecom operator owns around 45,200 towers and has 1,20,000 kms of intra- and inter-city fiber laid out. Reliance Infratel is the country’s
third-largest tower company behind Bharti Infratel and Indus Towers.
Bharti Infratel is the largest and the only listed company in the space with nearly 86,000 towers. IT also owns a stake in Indus.
Currently, Reliance Communications holds nearly 96 per cent stake in Reliance Infratel, while the remaining is held by George Soros’ Quantum (M) and New Silk Route, among others.
Reliance Communications was responding to a report in The Economic Times that said citing sources that the firm is mulling to divest a controlling 51 per cent equity stake in Reliance Infratel at a valuation of Rs 20,000-25,000 crore.
In the most recent deal in the sector, last month KEC International Ltd inked a pact to sell its 381 telecom sites in Chhattisgarh, Meghalaya and Mizoram to NASDAQ-listed American Tower Corp’s (ATC) Indian arm for Rs 81 crore (approximately $13 million).
The deal has been struck at a valuation of roughly Rs 21.2 lakh per tower. Larger firms like Reliance Infratel command much higher valuation.
For ATC, this was the fourth acquisition in India taking its total tower assets in the country to over 13,000. ATC entered India in 2007 and one year later bagged its first order to build 175 sites in Bihar and Orissa.
In May 2009, it acquired Xcel Telecom to add 1,657 towers to its portfolio and in November the same year acquired 327 more towers in East India from Transcend Infrastructure. In 2010, it consolidated its position by acquiring 4,629 towers from Essar Telecom. The firm crossed the milestone of 10,000 towers mark in 2012.
In a big deal last November, ATC agreed to acquire Indian cellular services provider Bharti Airtel Ltd’s over 4,800 communications towers in Nigeria for about $1.05 billion.
On Thursday, shares of Reliance Communications were trading at Rs 61.65 each, down 2.3 per cent on BSE in a weak Mumbai market at 12.21 PM.
(Edited by Joby Puthuparampil Johnson)