Reliance Infratel had seen its earlier attempts to launch an IPO fail due to adverse market conditions. The company has again filed its Draft Prospectus with SEBI to launch IPO in Next Quarter. 10% stake will be divested and Reliance Communication will continue to hold 85% stake in the Telecom Infrastructure Arm.
Reliance Infratel IPO News:
2007 – Company raises Rs 1,400 crore by selling a 5 per cent stake to 7 investors — George Soros, HSBC, Fortress Capital, New Silk, Galleon, DA Capital and GLG Capital
4 Feb 2008 – Reliance Infratel files DRHP with Sebi
15 May 2008 – Gets regulatory nod for IPO Offering
15 August 2008 – Reliance Infratel IPO cancelled
22 Sep 2009 – Anil Ambani announced plans for IPO
15 Jan 2010 – SEBI approves IPO
About the company:
2007 – 15,000 Towers
2010 – 55,000 Towers
Tenancy:
Current tenancy ratio – 2 (2010)
Potential tenancy ratio – 4-7 (2012)
Tenants: Etisalat DB, S Tel, Aircel, Tata Teleservices and MTS.
RCom’s own 3G and wireless broadband (Wimax) networks are expected to take up two slots more on each installation over the next 12 months.
In July 2009, Reliance Infratel signed a Rs 10,000 crore contract with Etisalat DB India to provide tower support in 15 circles.
Excerpts from Ambani’s speech:The De-merger & Consolidation Of OFCOur decision to demerge was guided by the need to keep ourselves asset-light, improve our return on equity and create value for our shareholders.In July 2007, we divested 5 per cent of Reliance Infratel for about Rs. 1,400 crore, generating capital gains of over Rs 1,200 crore for you, our shareowners. This deal attributed an equity value of about Rs. 27,000 crore to the company, amounting to Rs. 135 for every share of Reliance Communications.The recent transfer of optic fiber assets to our subsidiary, Reliance Infratel, has brought our entire passive infrastructure portfolio under one entity, enabling an efficient organizational structure from both customer acquisition and organizational cost perspectives. (Reliance Communications shareholders approved the demerger of the Optic Fiber Division of RCOM to Reliance Infratel in May).Growth, ExpectationsAt the time (2007), we had barely 15,000 towers in our portfolio. Today, we have three times that number at over 48,000 towers — and increasing. We have now added 35,000 towers over the last two years.At the time, we utilized barely 20,000 tenancy slots on our multi-tenancy towers. Today, the occupancy on our towers stands at around 75,000, a number that is set to more than double in the next three years, driven both by our own internal requirement and that of a large number of new and existing operators.In FY 2008, we had a revenue of Rs 1,500 crore. In FY 2009, that revenue has gone up by over 200 per cent to Rs 5,000 crore. In the same time period, the net profit has expanded by 400 per cent to touch Rs. 1,700 crore.We expect the demand for passive telecom infrastructure to more than double in the next couple of years.Business From New TelcosWe are benefiting from the infrastructure requirements of new entrants in the sector who are setting up their networks. We host the telecom electronics of a growing number of other operators on our towers, including Etisalat DB, S-Tel, Aircel, Tata Teleservices, MTS and others.In July this year, we signed a long-term, infrastructure sharing agreement with Etisalat DB valued at over Rs. 10,000 crore for a minimum period of 10 years. Under the agreement, we will provide a wide range of services, including passive infrastructure and transmission services. Last month, we concluded an agreement with another new operator S-Tel, to provide it telecom infrastructure in 6 operating circles.Reliance’s GSM Network Roll Out; Tapping Synergies Between GSM and CDMA NetworksDuring the previous year, we rolled out our nationwide GSM wireless services in a record time. The project was concluded in a span of barely 11 months. Both these networks operate on common, technology-independent infrastructure including telecom towers, network connectivity, long distance infrastructure, sales, distribution and retail network, back-end call center and BPO support. Apart from cutting the time-to-market of our GSM launch, this has also enabled us rationalize our capital expenditure significantly, making the new network profitable from Day One, in line with our existing wireless profitability.RCOM Subscriber AdditionsAs on March 31, 2009, we had 73 million subscribers on our wireless network, which has further increased to 85 million subscribers at present. We added 27 million subscribers during FY 2009, an increase of over 51 per cent. We are among the Top 2 wireless operators in the country.Reliance Mobile added about 23 million subscribers in the eight-month period from January to August, representing 21 per cent share of the net subscriber additions across the industry. Currently, we rank among the Top 5 telecom companies in the world by number of customers in a single country. By the end of this fiscal year, we look forward to acquiring our 100 millionth customer.Pre-paid User Base, MoUAs before, pre-paid subscribers contributed most of our growth. We added over 26.7 million prepaid subscribers in the last financial year, representing over 99.5 per cent of our wireless subscriber growth. Our subscribers consumed over 27,000 crore wireless minutes nationwide last year.No Significant Spend On Advertising?A consumer product launch in our country, even on a scale smaller than in telecom, is usually supported by advertising spends running into hundreds of crores of rupees. Our innovative and unconventional strategy used airtime minutes as a highly effective currency to launch our nationwide service without any significant spend on advertising and promotions.Coverage: Our network now covers over 24,000 towns and over 600,000 villages. This includes coverage of 95 per cent of all rail routes and highways in the country, traversing well over 270,000 kilometers.PCO Business: We have an undisputed leadership in the PCO segment, with over 2 million call offices across the country.Fixed Wireless Phones: We bring connectivity to the homes and offices of over 6 million subscribers across the country on Fixed Wireless Phones.On VAS: We are the largest provider of value added services in the country. Reliance Mobile World allows our wireless subscribers access to the most comprehensive range of VAS applications and over 200,000 content titles on their handsets. Related – Sachet VAS: RCOM’s Daily Pricing Strategy; Effect On ARPURural JV With Kribhco: This joint venture will aggressively market our telecom products and services, giving us greater distribution power in rural areas. The next big wave of subscriber growth in India will take place in the rural hinterland. Our pioneering initiative in reaching the rural subscriber in his own backyard will yield long-term value. More on the tie up on Medianama.On 3G & WiMAX: We are currently evaluating our participation in both the 3G and WiMAX auctions, which are scheduled to take place towards the end of this year.Other Services: We see significant opportunities across a range of businesses from mobile value added services to enterprise IT, from long distance voice and data services to Internet data centers, from consumer broadband and, home entertainment to telecom retailing and related businesses.
Excerpts from Ambani’s speech:
The De-merger & Consolidation Of OFC
Our decision to demerge was guided by the need to keep ourselves asset-light, improve our return on equity and create value for our shareholders.
In July 2007, we divested 5 per cent of Reliance Infratel for about Rs. 1,400 crore, generating capital gains of over Rs 1,200 crore for you, our shareowners. This deal attributed an equity value of about Rs. 27,000 crore to the company, amounting to Rs. 135 for every share of Reliance Communications.
The recent transfer of optic fiber assets to our subsidiary, Reliance Infratel, has brought our entire passive infrastructure portfolio under one entity, enabling an efficient organizational structure from both customer acquisition and organizational cost perspectives. (Reliance Communications shareholders approved the demerger of the Optic Fiber Division of RCOM to Reliance Infratel in May).
Growth, Expectations
At the time (2007), we had barely 15,000 towers in our portfolio. Today, we have three times that number at over 48,000 towers — and increasing. We have now added 35,000 towers over the last two years.
At the time, we utilized barely 20,000 tenancy slots on our multi-tenancy towers. Today, the occupancy on our towers stands at around 75,000, a number that is set to more than double in the next three years, driven both by our own internal requirement and that of a large number of new and existing operators.
In FY 2008, we had a revenue of Rs 1,500 crore. In FY 2009, that revenue has gone up by over 200 per cent to Rs 5,000 crore. In the same time period, the net profit has expanded by 400 per cent to touch Rs. 1,700 crore.
We expect the demand for passive telecom infrastructure to more than double in the next couple of years.
Business From New Telcos
We are benefiting from the infrastructure requirements of new entrants in the sector who are setting up their networks. We host the telecom electronics of a growing number of other operators on our towers, including Etisalat DB, S-Tel, Aircel, Tata Teleservices, MTS and others.
In July this year, we signed a long-term, infrastructure sharing agreement with Etisalat DB valued at over Rs. 10,000 crore for a minimum period of 10 years. Under the agreement, we will provide a wide range of services, including passive infrastructure and transmission services. Last month, we concluded an agreement with another new operator S-Tel, to provide it telecom infrastructure in 6 operating circles.
Reliance’s GSM Network Roll Out; Tapping Synergies Between GSM and CDMA Networks
During the previous year, we rolled out our nationwide GSM wireless services in a record time. The project was concluded in a span of barely 11 months. Both these networks operate on common, technology-independent infrastructure including telecom towers, network connectivity, long distance infrastructure, sales, distribution and retail network, back-end call center and BPO support. Apart from cutting the time-to-market of our GSM launch, this has also enabled us rationalize our capital expenditure significantly, making the new network profitable from Day One, in line with our existing wireless profitability.
RCOM Subscriber Additions
As on March 31, 2009, we had 73 million subscribers on our wireless network, which has further increased to 85 million subscribers at present. We added 27 million subscribers during FY 2009, an increase of over 51 per cent. We are among the Top 2 wireless operators in the country.
Reliance Mobile added about 23 million subscribers in the eight-month period from January to August, representing 21 per cent share of the net subscriber additions across the industry. Currently, we rank among the Top 5 telecom companies in the world by number of customers in a single country. By the end of this fiscal year, we look forward to acquiring our 100 millionth customer.
Pre-paid User Base, MoU
As before, pre-paid subscribers contributed most of our growth. We added over 26.7 million prepaid subscribers in the last financial year, representing over 99.5 per cent of our wireless subscriber growth. Our subscribers consumed over 27,000 crore wireless minutes nationwide last year.
No Significant Spend On Advertising?
A consumer product launch in our country, even on a scale smaller than in telecom, is usually supported by advertising spends running into hundreds of crores of rupees. Our innovative and unconventional strategy used airtime minutes as a highly effective currency to launch our nationwide service without any significant spend on advertising and promotions.
Coverage:
Our network now covers over 24,000 towns and over 600,000 villages. This includes coverage of 95 per cent of all rail routes and highways in the country, traversing well over 270,000 kilometers.
Reliance Infratel had seen its earlier attempts to launch an IPO fail due to adverse market conditions. The company has again filed its Draft Prospectus with SEBI to launch IPO in Next Quarter. 10% stake will be divested and Reliance Communication will continue to hold 85% stake in the Telecom Infrastructure Arm.
Reliance Infratel IPO News:
2007 – Company raises Rs 1,400 crore by selling a 5 per cent stake to 7 investors — George Soros, HSBC, Fortress Capital, New Silk, Galleon, DA Capital and GLG Capital
4 Feb 2008 – Reliance Infratel files DRHP with Sebi
15 May 2008 – Gets regulatory nod for IPO Offering
15 August 2008 – Reliance Infratel IPO cancelled
22 Sep 2009 – Anil Ambani announced plans for IPO
15 Jan 2010 – SEBI approves IPO
About the company:
2007 – 15,000 Towers
2010 – 55,000 Towers
Tenancy:
Current tenancy ratio – 2 (2010)
Potential tenancy ratio – 4-7 (2012)
Tenants:
Etisalat DB, S Tel, Aircel, Tata Teleservices and MTS.
RCom’s own 3G and wireless broadband (Wimax) networks are expected to take up two slots more on each installation over the next 12 months.
In July 2009, Reliance Infratel signed a Rs 10,000 crore contract with Etisalat DB India to provide tower support in 15 circles.
Excerpts from Ambani’s speech:
The De-merger & Consolidation Of OFC
Our decision to demerge was guided by the need to keep ourselves asset-light, improve our return on equity and create value for our shareholders.
In July 2007, we divested 5 per cent of Reliance Infratel for about Rs. 1,400 crore, generating capital gains of over Rs 1,200 crore for you, our shareowners. This deal attributed an equity value of about Rs. 27,000 crore to the company, amounting to Rs. 135 for every share of Reliance Communications.
The recent transfer of optic fiber assets to our subsidiary, Reliance Infratel, has brought our entire passive infrastructure portfolio under one entity, enabling an efficient organizational structure from both customer acquisition and organizational cost perspectives. (Reliance Communications shareholders approved the demerger of the Optic Fiber Division of RCOM to Reliance Infratel in May).
Growth, Expectations
At the time (2007), we had barely 15,000 towers in our portfolio. Today, we have three times that number at over 48,000 towers — and increasing. We have now added 35,000 towers over the last two years.
At the time, we utilized barely 20,000 tenancy slots on our multi-tenancy towers. Today, the occupancy on our towers stands at around 75,000, a number that is set to more than double in the next three years, driven both by our own internal requirement and that of a large number of new and existing operators.
In FY 2008, we had a revenue of Rs 1,500 crore. In FY 2009, that revenue has gone up by over 200 per cent to Rs 5,000 crore. In the same time period, the net profit has expanded by 400 per cent to touch Rs. 1,700 crore.
We expect the demand for passive telecom infrastructure to more than double in the next couple of years.
Business From New Telcos
We are benefiting from the infrastructure requirements of new entrants in the sector who are setting up their networks. We host the telecom electronics of a growing number of other operators on our towers, including Etisalat DB, S-Tel, Aircel, Tata Teleservices, MTS and others.
In July this year, we signed a long-term, infrastructure sharing agreement with Etisalat DB valued at over Rs. 10,000 crore for a minimum period of 10 years. Under the agreement, we will provide a wide range of services, including passive infrastructure and transmission services. Last month, we concluded an agreement with another new operator S-Tel, to provide it telecom infrastructure in 6 operating circles.
Reliance GSM and CDMA Network Synergies:
During the previous year, we rolled out our nationwide GSM wireless services in a record time. The project was concluded in a span of barely 11 months. Both these networks operate on common, technology-independent infrastructure including telecom towers, network connectivity, long distance infrastructure, sales, distribution and retail network, back-end call center and BPO support. Apart from cutting the time-to-market of our GSM launch, this has also enabled us rationalize our capital expenditure significantly, making the new network profitable from Day One, in line with our existing wireless profitability.
Reliance Communication Subscriber Additions
As on March 31, 2009, we had 73 million subscribers on our wireless network, which has further increased to 85 million subscribers at present. We added 27 million subscribers during FY 2009, an increase of over 51 per cent. We are among the Top 2 wireless operators in the country.
Reliance Mobile added about 23 million subscribers in the eight-month period from January to August, representing 21 per cent share of the net subscriber additions across the industry. Currently, we rank among the Top 5 telecom companies in the world by number of customers in a single country. By the end of this fiscal year, we look forward to acquiring our 100 millionth customer.
Pre-paid User Base, MoU
As before, pre-paid subscribers contributed most of our growth. We added over 26.7 million prepaid subscribers in the last financial year, representing over 99.5 per cent of our wireless subscriber growth. Our subscribers consumed over 27,000 crore wireless minutes nationwide last year.
Advertising
A consumer product launch in our country, even on a scale smaller than in telecom, is usually supported by advertising spends running into hundreds of crores of rupees. Our innovative and unconventional strategy used airtime minutes as a highly effective currency to launch our nationwide service without any significant spend on advertising and promotions.
Coverage:
Our network now covers over 24,000 towns and over 600,000 villages. This includes coverage of 95 per cent of all rail routes and highways in the country, traversing well over 270,000 kilometers.
Reliance Infratel Financials:
Anil Ambani ‘s talk on Financials of Reliance Infratele IPO
Out of the total proceeds from the IPO, Reliance Infratel has said, it would utilise Rs4,000 crore towards repayment of loan to a promoter entity Reliance Communication Infrastructure Ltd (RCIL), while the rest would be used for issue expenses and general corporate purposes.
Besides RCIL, the company has also taken unsecured loans from another promoter entity Reliance Communications (RCOM), as also from commercial banks and third-parties, for its business expansion needs.
However, the company does not envisage having any surplus distributable earnings anytime soon and therefore does not expect to pay any dividend in the foreseeable future.
“We will not be in position to pay dividends to our shareholders in the foreseeable future….our business is capital intensive and we plan to make substantial capital expenditures to complete our current expansion plans,” the company said in the draft prospectus.
The company said that it has very recently commenced operations as an independent entity pursuant to a demerger scheme, and its free reserves are only equal to the fair value of the assets that have been acquired under the scheme.
Therefore, “We do not expect having distributable funds or paying any dividends in the foreseeable future. Additionally, we have taken unsecured loans from our Promoters, which may be recalled at any time by the lenders.
“We may be unable to pay dividends in the near or medium term, and our future dividend policy will depend on our capital requirements and financing arrangements for further expansion, financial condition and results of operations,” it added.
“We intend to use some of the proceeds from the Issue to repay a loan from one of our Promoters, RCIL,” the company said, adding that the total outstanding as on 15 September was Rs4,931.5 crore repayable by 31 March, 2012.
“The purposes of the loan were to fund capital expenditures towards the roll-out of towers and passive infrastructure and to refinance high cost debt that had been drawn to fund capital expenditure for towers and passive infrastructure.
“While the loan from RCIL had a lower rate of interest, lower costs and fewer covenants than what was otherwise commercially available, the portion of the proceeds that will be used for repayment will not be available for other purposes, such as building additional telecommunication towers and passive infrastructure, marketing the Company to potential customers or investing in new equipment and personnel.“
The company is planning to sell 15.6 crore equity shares with face value of Rs 10 each, to be sold at a premium to be decided later.
This will represent 10.05 per cent of the company’s total equity capital and reduce the promoters’ holding to about 85 per cent, as the company has already divested five per cent equity to a clutch of institutional investors in the past.
Reliance Infratel has been availing short-term and long-term loans from its promoters, RCOM and RCIL, from time to time, primarily to fund its expansion plans.
At the end of last fiscal, total unsecured loans outstanding were Rs15161.3 crore, out of which unsecured loans outstanding from promoters (RCOM and RCIL) were Rs 9,111.4 crore and remaining from the commercial banks and third parties.
As of 15 September, 2009, total unsecured loans outstanding from promoters were Rs 10,753.9 crore — including Rs 5,822.32 crore due to RCOM and Rs4931.6 crore to RCIL.
“We intend to use part of the net proceeds amounting to Rs4,000 crore for repayment of the unsecured loan availed from RCIL,“ the company said, adding that RCIL has the right to charge interest from 1 October, or from the date the company gets listed on a recognized stock exchange, whichever is earlier.
Part of this loan, amounting to Rs 603.4 crore is repayable at the end of 31 March, 2010 and the balance of Rs4,328.2 crore by 31 March, 2012
