Reliance Infratel plans Rs 5,000-crore IPO

It would be the second-largest IPO after the Rs 6,000-crore one by state-run National Hydroelectric Power Corporation.

Reliance Infratel, the tower subsidiary of telecom service provider Reliance Communications (RCom), will file a draft Red Herring Prospectus (DRHP) for its proposed Initial Public Offer (IPO) of around Rs 5,000 crore within a week.

This would be second largest IPO after the economic downturn, the biggest being the Rs 6,000-crore IPO by state-run National Hydroelectric Power Corporation (NHPC).

Last year, Reliance Infratel had got market regulator Sebi to approve its proposed IPO. However, with the market conditions “not being conducive”, the process was frozen.

“Reliance Infratel is looking at raising around $1 billion by offloading a minimum of 10 per cent stake. The company intends to use the proceeds for its expansion plans, including expansion of its portfolio of telecom towers and footprint,” sources close to the development said.

The company needed funds for expansion plans and was in talks with a clutch of private equity majors. However, with the IPO’s finalisation, plans to raise funds from private equity companies have been shelved, they added.

Reliance Infratel, in which RCom holds a 95 per cent stake, has called for an analysts’ meet tomorrow in Mumbai, wherein the details are expected to be unveiled.

When asked to comment, the company’s spokesperson declined to do so.

Last year, Reliance Infratel had raised around Rs 1,400 crore through a round of private equity investment, by diluting around five per cent to a host of overseas investors. At the time, the company’s valuation was pegged at around Rs 28,000 crore.

At present, the independent tower company has over 50,000 towers. According to analysts, a tower was valued at an average of Rs 1 crore, but now with prices in the range of around Rs 75-80 lakh per tower, Reliance Infratel would be valued at a minimum of Rs 37,500 crore.

The company has a tenancy ratio (tenants per tower) of around 1.6 and 1.7 (tenants per tower).

The company has recently bagged two tower sharing deals, from new telecom licensee Etisalat DB Telecom India and S-Tel, while it is also believed to be in talks with GSM player Aircel Cellular for similar agreements.