Reliance mothballs $9b tower deal

Dylan Bushell-Embling | September 07, 2010

telecomseurope.net

India's Reliance Communications (RCom) and GTL Infrastructure have called off a $9 billion (€7 billion) deal to merge their tower assets, leaving the telco searching for new means of reducing its hefty debt.

RCom had planned to sell its 50,000 towers to GTL to create an $11 billion giant with 80,000 towers, but the merger collapsed after both parties let the term sheet for the deal expire.

The carrier was relying on the sale to help wipe out its $7 billion debt, which at a net debt to ebitda ratio of 4.5 times, is two-thirds higher than its closest competitors, FT.com said.

The deal was expected to have shaved RCom's debt in half, sources told the Economic Times.

But an investment analyst told the paper that the move was not surprising because the deal was overvalued.

In a statement, RCom said it was “now engaged with certain strategic and financial investors to pursue a similar transaction aimed at significant reduction in the company's debt.”

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