Reliance Infratel, the passive telecom infrastructure arm of Reliance Communications (RCom), will soon file a draft red herring prospectus for its public listing. Reliance Infratel will become the largest telecom tower firm to go for listing.

Reliance Infratel plans to dilute 10% stake, said RCom in its filing to Bombay Stock Exchange. RCom will continue to hold an 85% stake in the firm post IPO.

Though the amount to be raised is not known, recent reports have pegged the issue size at Rs 5,000-6,000 crore. Bank of America Merrill Lynch gave Reliance Infratel a rough enterprise value of $13-14 billion in a research note earlier this month.

The share price of RCom rose by around 1.5% to Rs 311.25, before falling back to Rs 306, much lower than its previous close of Rs 306.6 on the BSE.

Reliance Infratel had revenues of Rs 4,934 crore in FY09 with 48,000 towers and 75,000 tenants, said Anil Ambani, the head of Anil Dhirubhai Ambani Group (ADAG), at the AGM. In 2007, Reliance Infratel raised Rs 1,400 crore by selling a 5% stake to seven investors -

George Soros, HSBC, Fortress Capital, New Silk, Galleon, DA Capital and GLG Capital. The deal valued the firm at Rs 28,000 crore back then.

Another listed firm in this segment includes GTL Infrastructure, which has a market capitalisation of around Rs 3,200 crore with a portfolio of 7-8,000 towers.

The passive infrastructure space has been witnessing consolidation, especially among the independent operators. Quippo Telecom Infrastructure (QTIL) has merged with Wireless-TT Info-Services Limited (WTTIL), the tower arm of Tata Teleservices Limited, to form the largest independent player in this space. Another deal was American Tower Corporation's acquisition of Xcel Telecom. These deals valued each tower between Rs 45-62 lakh.

Gurgaon-based Independent Mobile Infrastructure Ltd (IMIL) and Hyderabad's Aster Infrastructure were reportedly put on the block by their private equity owners earlier this year. Essar Telecom Infrastructure (ETIPL) and the tower unit of Aircel Cellular are in discussion for a potential sale or merger.

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