Reliance Infratel plans to come out with IPO

Anil Ambani-controlled Reliance Communications, on Tuesday said that its passive infrastructure subsidiary, Reliance Infratel, plans to come out with its initial public offer (IPO) shortly.

?The draft prospectus for the initial public offer of our telecom tower subsidiary Reliance Infratel will be filed with market regulator Securities and Exchange Board of India shortly,? Reliance Communications? Chairman, Anil Ambani, told shareholders at its annual general meeting on Tuesday.

Ambani said the company would offer a 10 per cent stake in the passive infrastructure arm via the IPO, but he did not specify any time-frame. He also did not mention how much the company was looking to raise from the issue.

A large part of the funds raised would be used to reduce debt, he said.

?RCOM shareholders will hold 85 per cent of Reliance Infra and that?s a huge value unlocking. There will be a substantial capital appreciation for Reliance Communications shareholders as the communication and infrastructure businesses grow,? Ambani said.

Reliance Infratel, Ambani said, had revenues of Rs 4,934-crore in FY 09. We currently have 48,000 towers and 75,000 tenants. The tenancy for Reliance Infratel will double by 2012,? he added.

?We have now added 35,000 towers over the last two-years creating the largest supply base of plug and play telecom infrastructure, both for our internal network expansion and for the use of operators,? he said.

The company has recently transferred its optical fibre division to Reliance Infratel to bring the larger market supposition under the same legal entity and create greater cost synergies, Ambani said.

?In July, we signed a long-term infrastructure sharing agreement with Etisalat DB valued at over Rs 10,000-crore for a minimum period of ten years,? he said.

Reliance Communications also said that its capex would decline significantly starting this year and continue on a downward trend in the future.

?We expect our capex to decline significantly starting this year and continue on a downward trend in the future, particularly in relation to the scale of our expanding operations,? Ambani said.

Over the last two-years, the company had committed substantial investments in its business, rolling out the largest network expansion of its kind in the world in a record time, he said.

?Our capex intensity peaked over FY 08-09–that scale of mega-expenditure is now behind us,? Ambani said.

?We have also more than doubled our asset base to over 1,02,000-crore in this period,? Ambani said, adding ?through this expansion process, we have maintained the stability of our margins.? In 2009, Reliance Communications? net worth exceeded Rs 37,000-crore making it one of the top three companies in India, he said.

Despite a substantial capex commitment of about Rs 40,000-crore in just two-years, ?our balance-sheet remains strong and we maintain a conservative debt-equity ratio of 0.53,? he said.

Currently, the Anil Ambani-run company?s subscriber base stands at 85-million, placing it among the top five companies globally in terms of subscribers in a single country, he said.

Ambani also said that the subscriber momentum continued to be strong. The current subscriber base of the company stood at 86-million.

?We look forward to acquiring our 100-millionth subscriber by the close of this financial year,? he said.

?The next wave of growth will come from GSM operations,? Ambani added.