Reliance InfraTel IPO (Telecom Infrastucture RTIL IPO)

After Power, it’s the Tower business that is in line of sight for the junior Ambani. Having launched the biggest ever IPO in the history of India – The Reliance Power IPO, the company is now set to encash or better to say COLLECT another big chunk of money from the IPO business or the primary market listing. As per the news, it is learnt that the Anil Ambani, is planning to file the Red Herring Prospectus with SEBI to bring out its IPO for the Reliance Tower Business, under the Reliance Anil Dhirubhai AMbani Group company called Reliance Telecom Infrastructure Limited (RTIL). The issue is expected to be in the size of Rs. 5,000-6,000 crores or Rs. 500-600 Million Rs. offering.
The list of book running lead managers and merchant bankers appointed for the IPO are real big names in the financial world, and they include J P Morgan, Enam Securities, UBS and ABN Amro.

Bankers close to the development said RTIL will sell nearly 10% of its post-issue share capital through the IPO which will put its valuation more than double of what it achieved in July when it privately placed 5% stake to a group of institutional investors. RTIL, a 95% subsidiary of Reliance Communications (RCOM), sold the stake for Rs 1,400 crore to a host of investors including George Soros, HSBC, Fortress Capital, New Silk, Galleon, DA Capital and GLG Capital in a deal which had put its valuation at Rs 27,000 crore.

So if the IPO money raising value of 5,000-6,000 crores is only for the 10% equity that they are going to sell through the IPO, then going by the IPO size, the equity valuation of RTIL, a company engaged in the business of building, owning and operating communications towers, will be around Rs 50,000-60,000 crore. This will translate into nearly Rs 250-300 per RCOM share. The RCOM stock closed at Rs 612.15 on Friday on the BSE.

RCOM or Reliance Communications had “demerged” its tower assets in RTIL last year in a move which set the benchmark for the Mobile infrastructure business in India and was followed by most of the telecom companies. RTIL has a presence in ALL the 23 telecom circles in the country. It has a 10-year master services agreement to provide passive telecom infrastructure to RCOM. Additional tenants in the form of external wireless operators on RTIL's towers will provide incremental growth for it. With a total of 14,000 existing towers in India right now, the company is expected to raise that number to 40,000 towers. Another 20,000 are planned to be added the next year. So the business prospects seems to be bright – as far as one can see the growth of Roti, Kapda and Bandwidth in India.

From the news: Reliance Power, another R-ADAG group company, last week completed the allotment of shares of Reliance Powerof its Rs 11,560-crore IPO. However, the expectations are dim and highly volatile, given the Grey market trading prices of Reliance Power IPO shares. Wait for more things to happen in the primary market. Though the short terms volatile trading sessions have taught great lessons to the investors and traders in the market, the investors are expected to be winners only in the long run.

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