Reliance Communications (RCom), has decided to merge its 50,000 telecom tower assets, owned by its 79.7% subsidiary Reliance Infratel (RInfratel), with GTL Infrastructure’s 33,000 towers, to create the world’s largest independent tower company, not owned or controlled by a telecom operator.
Below is an analysis of the merger and the possible structuring of the transaction.
Towers Rcom, through RInfratel GTL Infra (present) GTL Infra
(post merger)
No of towers 50,000 33,000 83,000
Tenants 87,500 39,600 125,000
Tenancy ratio 1.75 1.20 1.51
Present Equity Details RCom RInfratel GTL Infra (present)
In Rs. Crore
Equity 1,032 957.35
FV 5 10
No of shares 206.4 95.7
Market Price (Fri 25th June's closing price) 193.0 45.0
Market Cap (based on Friday's closing price) 39,836 4,308
Debt 33,000 18,000 4,500
Cash Not available 154 460
EV (present) 72,836 8,348
Present Shareholding Pattern RCom RInfratel GTL Infra (present)
ADAG 67.58%
RCom shareholders 32.42%
RCom 79.71%
Other ADAG Group Cos 15.29%
PE investors in RInfratel 5%
Manoj Tirodkar Group 53.42%
Other GTL Infra shareholders 46.58%
Deal Details RInfratel GTL Infra (present)
In Rs. Crore
Enterprise Value (Assumed in proportion of no. of towers) 30,000 20,000
EV/ tower 0.60 0.60
Less: Debt 18,000
Equity value of RInfratel 12,000
Mode of Settlement:
- Cash to RCom - Note A 5,500
- Equity shares in GTL Infra of Rs. 10 each - Note B 6,500
Note A:
How will GTL Infra raise cash to pay RCom? 5,500
(i) Fresh equity shares of Rs 10 each to GTL Infra promoter @ Rs. 45/sh 2,250
- No. of new shares to be issued 50.0
(ii) Debt / term loans (balance) 3,250
Note B:
No. of new shares to be issued by GTL Infra 144.44
(valued at Rs. 45/sh)
Breakup of new shares:
(i) to ADAG (for Rcom holding) 53.87% 77.81
(67.58% of 79.71% holding of Rcom in Rinfratel)
(ii) to RCom shareholders 25.84% 37.33
(32.42% of 79.71% holding of Rcom in Rinfratel)
(iii) to other ADAG companies (for Rinfratel holding) 15.29% 22.09
(iv) to RInfratel PE investors 5% 7.22
Swap Ratio for RCom shareholders
No. of shares to be issued to RCom (i + ii above) 115.14
Existing no. of Rcom issued shares 206.4
No. of GTL Infra shares per Rcom share 0.56 0.56
Present RCom share price has value of Rs. 25 per share towords the tower deal
In Jan 2010, GTL Infra has acquired 17,500 towers from Aircel,in an all cash deal, at an EV of Rs 8,400 crore i.e. EV Rs 48 lakh/tower. The company was to fund this acquistion through equity and debt.
Aircel towers acquisition In Rs. Crore
Deal Value 8,400
Less: Funds accounted for by GTL Infra till 31st March 2010 1,815
Balance to be raised by GTL Infra 6,585
(i) Fresh equity to GTL Infra promoter @ Rs 45 per share 2,385
- No of new shares to be issued 53.0
(ii) Debt / term loans 4,200
GTL Infra can raise limited loans to fund Aircel tower acquisition, as it has debt of Rs. 4,500 crores as on 31-03-10 on its books, besides Rs. 18,000 crore from RInfratel; and it will have to raise further debt to pay cash to RCom.
GTL Infra (post merger) In Rs. Crore
No. of shares (existing + Note A + Note B + Aircel acquisiton) 343.18
FV 10
Equity (new) 3,432
Debt (existing + Note A + Rinfratel debt + Aircel acquisiton) 29,950
Networth (existing + Note A + Note B + Aircel acquisiton) 12,906
Debt Equity Ratio 2.3
EV 50,000
Less: Debt 29,950
Expected Market Cap 20,050
Expected Market Price (Rs/sh) 58.4
Expected Shareholding Pattern of GTL Infra % holding No of shares
ADAG 29% 99.89
RCom shareholders 11% 37.33
PE investors in RInfratel 2% 7.22
Manoj Tirodkar Group 45% 154.14
Present GTL Infra shareholders 13% 44.59
Total 100.0% 343.18
Tuesday, June 29, 2010
Monday, June 28, 2010
Rcom shareholder will get 2-3 GTL infra shares free per the deal estimats
As part of the GTL deal, over 2 million shareholders of RCOM and the minority shareholders of Rel Infratel are set to receive free listed
shares of the merged entity. ‘‘ The swap ratio is expected to be in the range of 2-3 shares of GTL Infra for every one share of RCOM, and will depend on the quantum of debt that is reduced in Rel Infratel,’’ sources told TOI. A detailed picture would be available within the next three weeks, the sources added.
Though the exact financial details of the deal are not immediately available, it is learnt that the deal is not based on the exact number of towers that RCOM owns but the tenants on those towers. The current and future tenants of RCOM’s towers are said to have enabled a deal size of Rs 48 lakh per tower.
With the 50,000 towers owned by RCOM, the deal pitches GTL Infra into the No. 2 slot in India with a combined total 80,000 towers, behind Indus Towers’ 1 lakh telecom towers. As against GTL, which is an independent and neutral firm, Indus is a consortium owned by leading telecom companies, including Bharti Airtel, Vodafone Group and Idea Cellular. The owners of Indus have pooled their assets to form the firm. GTL, on the other hand, continues to remain independent and neutral.
Upon closing, the merged entity will have over 80,000 towers and over 1,25,000 tenancies from over 10 telecom operators. The interests of RCOM as the largest tenant of the merged entity have been adequately protected through appropriate contractual arrangements, sources said. Sources said RCOM decided to ink the deal with GTL because of ‘‘ the benefits of scale that would be immediately available, as well as enjoying the future benefits when more tenants get added onto the towers’’ .
The fact that GTL is an independent tower company also helped swing the deal in its favour. Globally, Crown Castle and American Tower Corporation are among the few telecom firms that are not controlled by telecom operators . ‘‘ Though infrastructure sharing is the norm with most operators as of now, having a neutral, independent stand favours faster deployment and investment optimisation ,’’ an analyst with a brokerage house said.
Source : Economic times.
Still More Good news is in line as after that Rcom may hiveoff DTH IPTV business and after that it will look for 26% strategic investor. so Three Cheers for RCOM and RCOM Shareholder
shares of the merged entity. ‘‘ The swap ratio is expected to be in the range of 2-3 shares of GTL Infra for every one share of RCOM, and will depend on the quantum of debt that is reduced in Rel Infratel,’’ sources told TOI. A detailed picture would be available within the next three weeks, the sources added.
Though the exact financial details of the deal are not immediately available, it is learnt that the deal is not based on the exact number of towers that RCOM owns but the tenants on those towers. The current and future tenants of RCOM’s towers are said to have enabled a deal size of Rs 48 lakh per tower.
With the 50,000 towers owned by RCOM, the deal pitches GTL Infra into the No. 2 slot in India with a combined total 80,000 towers, behind Indus Towers’ 1 lakh telecom towers. As against GTL, which is an independent and neutral firm, Indus is a consortium owned by leading telecom companies, including Bharti Airtel, Vodafone Group and Idea Cellular. The owners of Indus have pooled their assets to form the firm. GTL, on the other hand, continues to remain independent and neutral.
Upon closing, the merged entity will have over 80,000 towers and over 1,25,000 tenancies from over 10 telecom operators. The interests of RCOM as the largest tenant of the merged entity have been adequately protected through appropriate contractual arrangements, sources said. Sources said RCOM decided to ink the deal with GTL because of ‘‘ the benefits of scale that would be immediately available, as well as enjoying the future benefits when more tenants get added onto the towers’’ .
The fact that GTL is an independent tower company also helped swing the deal in its favour. Globally, Crown Castle and American Tower Corporation are among the few telecom firms that are not controlled by telecom operators . ‘‘ Though infrastructure sharing is the norm with most operators as of now, having a neutral, independent stand favours faster deployment and investment optimisation ,’’ an analyst with a brokerage house said.
Source : Economic times.
Still More Good news is in line as after that Rcom may hiveoff DTH IPTV business and after that it will look for 26% strategic investor. so Three Cheers for RCOM and RCOM Shareholder
Friday, June 25, 2010
RCOM will zoom to 250 hold it hold it tight
RCOM is ruling at 190 it will sure hit 250 here is why.
1. They are hiveing off DIsh TV and IP Tv business into separate company value unlocking.
2. Reliance infratel is going to become separate company where rcom will be minority share holder and every rcom holder will get share due to demerger.
3. Once these 2 items will be done Rcom will announce 26% stack sell why after these 2 events because after that there will be 0 or very minimal debt in rcom book so it will help in fetching new strategic investor in to rcom.
4.Its share will not go below 225 after that because its book value is around 250.
5.Once stack sell is done WAIT there is one more item for share holder of rcom after 26% stack sale it will trigger an open offer to market and it will be above market premium so Gold is coming BABY from RCOM.
1. They are hiveing off DIsh TV and IP Tv business into separate company value unlocking.
2. Reliance infratel is going to become separate company where rcom will be minority share holder and every rcom holder will get share due to demerger.
3. Once these 2 items will be done Rcom will announce 26% stack sell why after these 2 events because after that there will be 0 or very minimal debt in rcom book so it will help in fetching new strategic investor in to rcom.
4.Its share will not go below 225 after that because its book value is around 250.
5.Once stack sell is done WAIT there is one more item for share holder of rcom after 26% stack sale it will trigger an open offer to market and it will be above market premium so Gold is coming BABY from RCOM.
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