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Reliance/GTL Merger Collapses

7:30 AM -- The US$10.7 billion telecom towers merger agreed between a Reliance Communications Ltd. subsidiary and GTL Infrastructure Ltd. has been scrapped, GTL revealed today in a filing with the Bombay Stock Exchange. (See Reliance, GTL Strike $10.8B Tower Deal and Reliance, GTL Merge Tower Units.)

The deal, involving the merger of Reliance Infratel's 50,000 towers with GTL's passive infrastructure portfolio, was struck in June and valued at 500 billion Indian rupees ($10.74 billion), making it one of India's largest ever M&A agreements.

But GTL said today that the original agreement expired on August 31, and that "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."

The deal would have helped Reliance tackle its INR300 billion ($6.4 billion) debt. The company has begun discussions with other investors and is also considering an IPO of the Infratel business, it said in a statement.

For more background, see this Bloomberg report.

— Gagandeep Kaur, India Editor, Light Reading

bergea 12/5/2012 | 4:24:19 PM
re: Reliance/GTL Merger Collapses

It is extremely ironic that the GTL/Reliance Infratel merger collapsed at the same time as Reliance ADA Group announced ambitious plans to offer financing at high interest rates for Indian infrastructure projects related to India's roads and electrical grid.  Since Reliance Communications was unable to reduce its $6.2 billion debt by selling tower assets to GTL, a bigger deal may be in the works with strategic investors to finance the spectrum and infrastructure costs associated with its new new 3G network.   

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