Reliance Communications shareholders approve demerger of wireless towers and infrastructure

Reliance Communications Ltd has announced that the equity shareholders of the Company at its meeting held on January 27, 2007 have approved a scheme of transfer of the existing wireless towers (CDMA and GSM) and related infrastructure of the Company, to its subsidiary, Reliance Telecom Infrastructure Ltd (RTIL) with an overwhelming majority of 99.99%, in value.

"This is the first of a series of initiatives we will be taking to remain asset-light, and enhance our competitiveness, ultimately leading to unlocking of further value for the benefit of our nearly 2 million shareholders", said Mr. Anil Ambani, Chairman of the Company, at the time of the board's approval to the scheme.

The demerger of passive infrastructure would benefit the stakeholders of the Company on account of:

- Enhanced financial flexibility and cost efficiency due to reduced set-up and operating costs.

- All new towers and related infrastructure will be set up by RTIL, with independent financing, thereby reducing capex requirements and leveraging on the Company's own Balance Sheet.

- Promote High value standalone business by conversion of cost- centric assets to revenue-centric ones by sharing passive infrastructure of RTIL with other wireless service providers

Under the scheme of transfer, more than 12,000 Towers shall be consolidated under RTIL.

Source : Equity Bulls

Keywords