The Securities and Exchange Board of India (SEBI) has cleared Reliance Infratel's draft red herring prospectus for its proposed initial public offering (IPO). Reliance Infratel will offer 10 per cent equity under the proposed IPO.
At present, Reliance Communications owns 95 per cent of Reliance Infratel and the balance 5 per cent is held by seven financial investors.
Reliance Infratel has 50,000 towers and optic backhaul infrastructure across 25,000 towns and 600,000 Indian villages. With a tenancy currently of two, sources say, it can increase the numbers to 4-7, with new players rolling out mobile operations across the country.
Comparing the valuation of the tower deal between GTL and Aircel, which is based on an average of Rs 48 lakh per tower, Reliance Infratel can be valued at around Rs 24,000 crore. However, sources close to the issue say that with a tenancy of 2 (instead of about 1.1 for Aircel), the valuation could go up to Rs 50,000 crore. It means that a 10 per cent stake could be valued anything between Rs 2,500 crore and Rs 5,000 crore.
Further, Reliance Infratel's towers have backhaul connectivity through optic fibre cables, as compared to the primarily microwave connectivity of GTL-Aircel towers.
When contacted, a Reliance Infratel spokesperson confirmed the development.
The consolidation spree in tower space started in 2007 when Bharti Airtel, Vodafone-Essar and Idea Cellular came together and decided to spin off their towers into an independent company, Indus Towers, which currently has over 100,000 towers.
According to a Reliance Equities' report in September, the number of telecom towers in India in 2009-10 is estimated to grow to 337,375 from an estimated 282,074 in 2008-09.
Essar Telecom Infrastructure, which has over 4,500 towers, is also looking to sell its business and is in talks with prospective buyers. According to sources, the company is looking at a valuation of Rs 47-48 lakh per tower.While the acquisition cost of a tower is nearly double that of erecting a new one (which is Rs 25-28 lakh), companies are looking at acquisition to save time, as well as covering gaps in their presence in various circles.