RCom to hive off land assets as realty firm
The Anil Ambani-led Reliance Communications (RCom), India's third-largest telecom service provider in terms of subscriber base, today announced that it was hiving off its entire real estate assets into a separate listed company.business Updated: Jul 08, 2013 03:01 IST
The Anil Ambani-led Reliance Communications (RCom), India's third-largest telecom service provider in terms of subscriber base, on Sunday announced that it was hiving off its entire real estate assets, estimated to be worth around Rs 12,000 crore, into a separate listed company.
The proposed demerger is part of RCom's strategic plan to divest non-core assets, and focus on its core wireless and enterprise business.
RCom shareholders will get free shares in the new company called Reliance Properties, in the ratio 1:1. The company has about two million shareholders.
The company, reeling under huge debt —Rs 37,000 crore at the end of March, 2013 — recently entered into an agreement for leasing its existing infrastructure of optical fibre cable (OFC) and towers to repay a part of the debt. The company is also in the process of selling 80% equity in its global undersea communication company.
"It is a good way to unlock the value of the company," said Prashant Singhal, global markets head, Ernst and Young. “Telcos should be focusing only on their core business. RCom has taken the right step."
"The preliminary and indicative monetisable value of RCom's real estate on development is estimated by independent valuers at over Rs 12,000 crore, which is equal to Rs 60 per RCom share," the company said in a statement.
Reliance Properties will work with leading global partners. The two properties that the company plans to develop include its 135-acre prime land at Dhirubhai Ambani Knowledge City, Navi Mumbai. The company also has a four-acre property near Connaught Place.
First Published: Jul 07, 2013 22:55 IST