RCOM and GTL call off tower deal

7 Sep 2010

Indian firm Reliance Communications (RCOM) has halted negotiations with local tower company GTL Infrastructure over proposals that would have seen it spin off the 50,000 telecoms towers its own via its Reliance Infrastructure subsidiary. According to Bloomberg, RCOM ended talks with GTL about the possible divestment after neither side could agree on a deal; the potential sale of RCOM’s towers was first revealed in June 2010, when it entered in to a non-binding agreement under which GTL would have given it equity and cash, as well as reducing Reliance Infratel’s consolidated net debt from INR330 billion (USD7 billion) to INR150 billion. RCOM had claimed that the deal would give it ‘enhanced financial flexibility’ as it continued to search for a potential strategic partner to take a 26% stake in the company. For its part, a purchase would have seen GTL more than double the number of towers under its control, and would have created a company with an estimated value of USD11 billion. No specific reason for the collapse of the deal has been given, with RCOM saying that it could not discuss the matter due to confidentiality agreements.

India, Reliance Communications (RCOM)