Adag Rejig Fray On Their Teclecom And Infra Arms
After a meeting of its committee of directors, which approved transfer of about half-a-dozen of its business units, Reliance Infra said the reorganisation would unlock value in view of possible investments by strategic and financial players in various businesses, in addition to other benefits.
At the same time, RCom's board of directors also approved transfer its optic fiber division to its subsidiary Reliance Infratel to create a single telecom infrastructure entity and cut down its operating costs.
Besides, it was aimed at identifying actual economic value arising from infrastructure business and telecom services businesses, the company said.
This comes within days of the group's financial services arm Reliance Capital announcing plans set up separate subsidiaries for consumer finance and home loan businesses, where it said, strategic investors could be brought in in about a year's time or once the market conditions improve.
There would be no change in the overall capital structure of the company and no shares or securities would be issued or cancelled as part of the restructuring exercises at both Reliance Infra and RCom.
Reliance Infra said the reorganisation would simplify and make its business structure transparent and lead to alignment of interest of various stakeholders and a focussed management.
Besides, it would help attract and retain quality talent and would lead to an optimal financial structure and tax efficiency for individual businesses.
As part of scheme, real estate unit will be transferred to Reliance Property Developers, Dahanu Thermal Power Station to Reliance Energy Generation, Power Transmission Division to Reliance Power Transmission, Power Distribution to Reliance Energy, EPC Division to Reliance InfraProjects and Toll Roads Division to Reliance InfraVentures.
The scheme is subject to requisite consent of lenders, shareholders, creditors, stock exchanges, the Bombay High Court and the approval from the government or any other statutory or regulatory authorities.
As part of the reorganisation exercise at RCom, the company would transfer its optic fiber division to its subsidiary Reliance Infratel to create a single telecom infrastructure entity and cut down its operating costs.
The company said that the exercise, which consolidates all its telecom infrastructure assets — tower and optic fibre — under one entity, would enhance stakeholders' value and provide benefits such as synergies and cost efficiencies in terms of lower operating costs.
The consolidation reflects the global trend of segregating the telecom infrastructure business, with a view of adopting best management practices and to identify the actual economic value arising out of the infrastructure business and telecom services businesses, the company said.
Reliance Infratel owns, operates and develops telecom infrastructure, primarily consisting of wireless communication sites and towers. It currently owns all towers used by RCom's CDMA and GSM wireless networks and is developing additional towers to meet the needs of RCom and other customers.
The restructuring proposal is subject to all requisite approvals, as might be required, and would be carried out through a court-approved scheme of arrangement at fair value.
Last month, Reliance Cap CEO Sam Ghosh had said that the company might "look into the option of involvement of a strategic investor. But not at present. May be in a year's time or as and when market condition improves."
"At this point of time the valuations of these entities are not clear. Once the business picks up and the exact valuation of the entities are known, we may consider the option (of strategic investor," Ghosh added.
He, however, noted that the company had no plans under consideration to tap the equity market for raising funds and added that Reliance Capital had enough capital in hand.
