Reliance Infratel, the telecom infrastructure unit and a subsidiary of Reliance Communications has filed its DRHP with SEBI on 4/02/08 to enter the capital market with an offer of 8.91 crore equity shares with a face value of Rs 5 each at a price to be decided through the book building process. The issue will offer 10.05% shares of Reliance Infratel to the public and the post issue holding of the promoters will be 85%.
Currently, institutional investors hold a 5% stake in the company, while the rest is held by different companies of the group. The largest shareholder is Reliance Communications Infrastructure (RCIL) at 79.71 percent. Qualified Institutional investors will be allotted 60% of the issue, non-institutional investors 10% and retail participants 30%.
Seven months ago, the company had sold a 5% stake to seven global financial investors, raising Rs 1,400 crore. The sale fetched a valuation of Rs 28,000 crores for the company. The seven investors were Fortress Capital, HSBC Principal Investments, Galleon Group, New Silk Route, GLG Partners, George Source Quantum Fund, and DA capital.
The shares are proposed to be listed on BSE & NSE.
JM Financial, JP Morgan India, ABN Amro Securities, Deutsche Equities, Enam Securities, ICICI Securities, Lehman Brothers, Macquire India and UBS Securities are acting as the book running lead managers to the IPO. HSBC Securities, Kotak Mahindra and SBI Capital are the co-book running lead managers.
The IPO is likely to hit the market by the end of the current financial year.
The company is part of the Reliance Anil Dhirubhai Ambani Group, one of India's
leading business conglomerates with business interests in the communications, power, financial services and entertainment sectors, among others. The company was founded by Reliance Communications (RCOM), the second-largest wireless communications company in India (in terms of subscriber base) with a total of 40.96 million CDMA and GSM subscribers as at December 31, 2007 and the flagship company of the Reliance ADA Group's communications business. Currently, the parent company, RCOM and its wholly-owned subsidiary Reliance Telecom Limited (RTL) are its network's anchor tenants.
The company was incorporated in April , 2001 but until March 30, 2007 it was a
dormant company with no material business or assets. On March 30, 2007, pursuant to the Merger Scheme approved by the Bombay High Court, Reliance Next Generation Technology Private Limited (RNGTPL), a subsidiary of RCIL which held certain telecommunications assets was merged into the company.
The company is a leading passive telecommunication infrastructure provider in India based on the number of telecommunication towers that the company owns. 'Passive infrastructure' refers to wireless towers used for the purpose of hosting and assisting in the operation of active infrastructure used for transmitting telecommunication signals. The company's business is to build, own and operate telecommunication towers and related assets at designated sites and to provide these passive telecommunication infrastructure assets on a shared basis to wireless service providers and other communication service providers under long-term contracts.
The company's relations with RCOM is one of its key competitive strengths and it intends to leverage this relationship by expanding the tower portfolio as RCOM and RTL expand their respective wireless networks. The company's core strategy for expansion is to roll out the company's network with at least one anchor tenant in place for the company's towers. The company has already built 23,434 towers and were ready for installation, as of December 31, 2007.For fiscal 2008, fiscal 2009 and fiscal 2010, RCOM and RTL have commissioned the company to develop an aggregate of 56,596 new tower sites, on which, either one or both of them will serve as the company's anchor tenants. In addition, the company's Master Service Agreement with both RCOM and RTL, have granted it a right of first refusal to develop new tower sites for the expansion of their respective wireless networks.
The company intends to utilize Rs 4,623.7 crore out of the issue proceeds for installation of 16,000 passive infrastructure sites (expansion) and for general corporate purposes. The geographical spread of the expansion is as follows: Metropolitan cities - Chennai, Delhi, Mumbai 1,190 towers/sites; Andhra Pradesh, Gujarat, Karnataka, Maharashtra & Tamil Nadu 10,000; Haryana, Kerala, Punjab, Rajasthan and UP 4,750 and J&K 60.
Break up of cost of items for 16,000 passive infrastructure sites:Tower structure, shelter and construction would entail an expenditure of Rs 2,371 crores; diesel generator Rs 480 crores; battery automatic voltage regulator, electrical bulk Rs1250.6 crores; air conditioners Rs 400 crores and others ( land deposit and security automation) is pegged at Rs 122.1 crores.
For the year ended march 31, 2007, Reliance Infratel posted an income of Rs 5.59 lakh and net profit was Rs 3.27 lakh as compared to an income of Rs 18,598 and net profit of Rs 4,778 for the year ended March 31, 2007. For the 9 month period ended Dec 31, 2007, the company's income was Rs 901.96 crores and net profit of Rs 153.62 crores.