Reliance Communication to sell entire stake in Reliance Infratel
DSIJ Intelligence / 25 Nov 2015
India's fourth largest wireless carrier Reliance Communication is close to finalising a deal in which it will sell its entire stake in Reliance Infratel Limited (RITL) according to reliable sources.
India's fourth largest wireless carrier Reliance Communication is close to finalising a deal in which it will sell its entire stake in Reliance Infratel Limited (RITL) according to reliable sources. Reliance Infratel is a tower unit of Reliance Communication.
RCom owns around 96 per cent stake in RITL.The sale would fetch Rcom around Rs.22,000 crores. The deal values Infratel at around Rs. 22,500 crores.The sale of private equities will be the complete exit of RCom from tower business in India.
RCom is looking at reducing the debt of the company from the money it will fetch through the sale of stakes in RITL. The total operating revenue of the company as per the year ending March 2015 stands at Rs.21,770 crores, an increase of 2.50 per cent on yearly basis. The EBITDA of the company is Rs. 4435 crores, an increase of 22.38 per cent and the EBITDA margin is 20.37 per cent compared to 17.06 percent same period last year. Net profit of the company stands at Rs.620 crores, a decrease of 45.47 percent. The total debt of RCom is looking to reduce its stand at Rs.31493 crores which is 35 per cent of the total assets of the company.
RCom is looking to monetise its non-core assets through this deal. Further this will help to improve the debt-to-EBITDA ratio of company. For the year ending March 2015, the total Debt-to-EBITDA of company is 7.20. A good debt-to-EBITDA ratio will show the firm's ability to pay off its debt and it will improve the creditworthiness of the company.
The stock of the RCom surged over 9 per cent on Tuesday to Rs.71.15.
RITL a subsidiary of Reliance Communications Limited, was incorporated in 2001 as a private limited company. RITL now operates as an independent wireless towers company pursuing its business plan to invest in its wireless towers portfolio and to acquire additional tenants on its towers. RITL functions as a third-party infrastructure provider, offering passive infrastructure-sharing to multiple wireless operators and the data and entertainment providers within the industry.
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