MUMBAI (Reuters) - Shares in Reliance Communications (RCOM.NS : 198.2 +5.9) rose as much as 6.4 percent on Monday after India's No.2 cellular carrier announced an agreement on Sunday to offload its telecoms towers to GTL Infrastructure in a deal that a source said would decrease its debt by about $3.9 billion.
The combined operations would have an enterprise value of over $11 billion and would own more than 80,000 towers, with more than 125,000 tenancies from over 10 operators, Reliance Communications said on Sunday.
GTL Infrastructure shares were up more than 6 percent.
Exact terms were not disclosed, but the deal will result in Reliance Comm, controlled by billionaire Anil Ambani, reducing its debt by 180 billion rupees ($3.9 billion), a person with direct knowledge of the matter said.
Reliance Comm's debt before the deal stood at about 330 billion rupees, including the cost to finance its recent third-generation (3G) spectrum licences.
Reliance Comm is also continuing with its effort to sell a 26 percent stake in itself. So far, only Abu Dhabi's Etisalat has publicly acknowledged that it is considering a deal with Reliance Comm.
"While the announced deals would help in strengthening the balance sheet, RCOM's key challenge is to profitably grow its revenues," Deutsche Bank analysts wrote in a research note.
India's 15-player cellular industry is fiercely competitive, with carriers engaged in a margin-crushing tariff war and burdened with the expense of 3G licences that cost far more than expected in a recent government auction.
Shares in Reliance Comm are up by 37.6 percent since the start of June, far outperforming the 4.3 percent gain in the Sensex (^BSESN : 17673.79 +99.26).
Under the terms of Sunday's deal, GTL Infrastructure Chairman Manoj Tirodkar would own 30 to 35 percent of the combined tower business and Ambani's Reliance ADA Group would own 26 percent, with shareholders in the two firms holding the remainder, sources with direct knowledge of the matter said.
India is the world's fastest-growing cellular market and with 600 million users is the second largest, after China.
Source :Yahoo Finance
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