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RCom oks hiving off tower biz

india Updated: Jun 14, 2010 21:23 IST
Manoj Gairola
Manoj Gairola
Hindustan Times
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The boards of Anil Ambani-led Reliance Communications Ltd. (RCom) and its telecom tower subsidiary Reliance Infratel on Monday cleared in principle a move to hive off the tower business to help the creation of the world’s largest independent telecom infrastructure company.

The development was expected as the Anil Dhirubhai Ambani Group (ADAG) tries to cut debt and raise cash by selling portions of its assets.

“I am delighted that this endeavour will greatly benefit RCom through substantial debt reduction and enhanced financial flexibility,” Ambani said in a statement.

“The demerger will reduce debt on RCom by about 50-60%,” said a market analyst.

Market sources said RCom is in talks with GTL Infrastructure, India’s largest independent tower company for merger. GTL owns more than 32,000 towers. It bought about 17,500 towers of Aircel, a national telecom service provider, about five months back. But RCom has not confirmed any merger plan.

Though RCom was contemplating the hive-off for sometime now, industry sources said the peace pact between Anil and elder brother Mukesh after an acrimonious business rivalry aided the process.

With Mukesh Ambani-controlled RIL’s impending entry into the telecom sector through broadban wireless segment a fact, RIL could become Reliance Infratel’s biggest customer. Most of the current customers are recent entrants into the field.

Reliance Infratel currently has 50,000 towers, but is set to grow it to 75,000 in three years.

Indus Towers, a joint venture between Bharti Airtel, Vodafone Essar and Idea, is Reliance Infratel’s main competitor. It owns more than 100,000 towers and is the largest tower company in the world. Indus Tower is planning to come out with an IPO at an “appropriate time”.