Rel Com, GTL rise on hive-off | business | Hindustan Times
Today in New Delhi, India
Mar 24, 2017-Friday
New Delhi
  • Humidity
  • Wind

Rel Com, GTL rise on hive-off

business Updated: Jun 28, 2010 21:52 IST
HT Correspondent

Anil Ambani’s latest plan to lose weight — by hiving off the telecom tower unit of his Reliance Communications to independent service provider GTL Infrastructure — cheered shares of both companies on Monday.

The move would bring in some cash while reducing some debt for RCom to fight its services battles. Its shares have risen by 45 per cent over a month. GTL has through the deal consolidated its position as the world’s leader in the tower service business.

While Reliance Communications witnessed an intra-day gain of 6.3 per cent before closing at Rs 201.5 up 4.7 per cent, GTL Infrastructure saw a jump of 20 per cent in its share price before it closed at Rs 47.2 with a gain of 4.1 per cent.

“The deal will strengthen RCom’s balance sheet and will increase the leveraging ability of RCom for investment into the core telecom business,” said Ajay Parmar, head of research at Emkay Share and Stock Brokers.

While a source close to the development said that GTL is looking to raise funds through a private equity deal for which talks are on, analysts add the size also sets the ground for more service players seeking its infrastructure back-up.

“We are not yet aware of the exact valuation of the deal as it is partly in cash, debt transfer and equity swap. The deal however looks to be good for both the companies,” said a brokerage analyst who did not wish to be named.

Telecom service players have coughed up funds to buy 3G spectrum. Leaner balance sheets with less debt are expected to ease financial pressures.