Reliance Infratel, the tower subsidiary of telecom service provider Reliance Communications (RCom), will file a draft Red Herring Prospectus (DRHP) for its proposed Initial Public Offer (IPO) of around Rs 5,000 crore within a week.
· This would be second largest IPO after the economic downturn, the biggest being the Rs 6,000-crore IPO by state-run National Hydroelectric Power Corporation (NHPC).
· Last year, Reliance Infratel had got market regulator Sebi to approve its proposed IPO. However, with the market conditions “not being conducive”, the process was frozen.
· “Reliance Infratel is looking at raising around $1 billion by offloading a minimum of 10 per cent stake. The company intends to use the proceeds for its expansion plans, including expansion of its portfolio of telecom towers and footprint.
· The company needed funds for expansion plans and was in talks with a clutch of private equity majors. However, with the IPO’s finalisation, plans to raise funds from private equity companies have been shelved.
· Last year, Reliance Infratel had raised around Rs 1,400 crore through a round of private equity investment, by diluting around five per cent to a host of overseas investors. At the time, the company’s valuation was pegged at around Rs 28,000 crore.
· At present, the independent tower company has over 50,000 towers. According to analysts, a tower was valued at an average of Rs 1 crore, but now with prices in the range of around Rs 75-80 lakh per tower, Reliance Infratel would be valued at a minimum of Rs 37,500 crore.
· The company has a tenancy ratio (tenants per tower) of around 1.6 and 1.7 (tenants per tower).
· The company has recently bagged two tower sharing deals, from new telecom licensee Etisalat DB Telecom India and S-Tel, while it is also believed to be in talks with GSM player Aircel Cellular for similar agreements.
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