GTL Infra says deal on RComm's telecom tower business off

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GTL Infrastructure, a part of the Global Group, today said its proposed deal with Reliance Communications for the merger of their telecom tower businesses had been called off.

The decision is being seen as a major blow to the efforts by Reliance Communications, a part of the Anil Dhirubhai Ambani Group (ADAG), to cut its debt.

GTL Infra had announced on June 27 this year that its Board of Directors had given in-principle approval to a Rs 50,000 crore ($ 11 billion) transaction that would have created the world's largest independent telecom infrastructure company, neither owned nor controlled by any telecom operator.

It had said that the "transformational" deal would be implemented through a merger of Reliance Infratel Limited's tower assets into GTL Infra.

The company, however, informed the Bombay Stock Exchange in a filing this morning that its Committee of Directors had, at their meeting today, reviewed the matter carefully.

"The Non-Binding Term Sheet signed by both parties dated June 27, 2010 expired on August 31, 2010.

"Subsequently despite efforts, both parties have neither extended the Term Sheet nor entered into any definitive transaction agreements as envisaged therein.

"Consequently, the process of merger as originally contemplated would not take place," GTL Infra said in the filing.

In January, GTL Infra had purchased the tower business of Aircel in an all-cash deal valued at an enterprise value of Rs 8400 crore.

The deal with Reliance Infratel would have created substantial scale and opportunties to improve tenancy for GTL Infra.

It had said in June that, upon closure of the transaction, the merged entity would have over 80,000 towers and over 1,25,000 tenancies from over 10 telecom operators. In addition, the merged entity would have had a firm option of addition 75,000 tenancies from leading industry players.

Later, Reliance Communications said in a statement that, following the expiry of the non-binding Term Sheet with GTL Infrastructure Ltd, it was now engaged in discussions with certain other strategic and financial investors to pursue a similar transaction.

It said the transaction would be aimed at significant reduction in the company's debt and unlocking of value for its shareholders from the passive infrastructure and related assets in its 95 per cent owned subsidiary, Reliance Infratel.

"An appropriate further announcement will be made in due course. Owing to the provisions of mutual confidentiality agreements, Reliance Communications cannot provide any comments on the reasons for the inability to conclude a transaction with GTL Infrastructure Ltd," the statement added.

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