Reliance Infratel Limited (“RITL”), a subsidiary of Reliance Communications Limited, was incorporated in 2001 as a private limited company. Reliance Communications Limited (“RCOM”) had filed a Scheme of Arrangement with the High Court of Judicature at Bombay on December 5, 2006 for the separation of its wireless towers assets owned by RCOM and its wholly owned subsidiary Reliance Telecom Limited (“RTL”). The High Court’s approval was received on March 16, 2007 and the scheme was effected on April 10, 2007.
RITL now operates as an independent wireless towers company pursuing its business plan to invest in its wireless towers portfolio and to acquire additional tenants on its towers. RITL functions as a third-party infrastructure provider, offering passive infrastructure-sharing to multiple wireless operators and data and entertainment providers within the industry.
RCOM had placed minority stake (5%) of RITL in July 2007 to international investors. RCOM will continue to evaluate strategic options for RITL including a listing or seeking strategic investors/partnership to enhance shareholders valuation.
RITL holds an IP 1 Licence (Infrastructure Provider) issued by the Department of Telecommunications (“DoT”) and is an independent wireless telecommunications infrastructure company, engaged in the business of building, owning and operating communications towers, optic fibre cable and other related assets at designated sites (together, “passive infrastructure”), and to make available this passive infrastructure on a shared basis to wireless and other communications service providers under long-term contracts. It provides pan-India integrated (wireless and wireline), convergent (voice, data and video) digital network and its coverage area includes 24,000 towns and 600,000 villages.
RITL is the only tower portfolio in India built greenfield and not through mergers and acquisitions, thereby resulting in no overlapping towers. It also has one of the youngest portfolios in the market, with an average age of approximately 4 years.
As on February, 2011, RITL’s wireless towers portfolio comprised of 45,443 towers which has a presence in all 23 telecom ‘circles’ in the country making it the largest pan-India tower player. RITL’s tower portfolio is uniformly distributed with approximately equal number of towers in all the 4 regions. Most of the towers, especially the ones located in the urban areas, are connected to RCOM’s state of the art fibre network. RITL’s tower portfolio is suitable for CDMA, GSM 900, GSM 1800, 3G and BWA networks. RITL has always followed, and will continue to do so in future, a conservative policy of building new towers, on a case to case basis, and that too only for meeting the contractual demand from long term tenants
Almost all the existing towers of RITL have a capacity to co-locate 4 tenants, and with provision for increasing capacity to up to 7 tenants with relatively minimal capital expenditure. RITL is committed to maintaining high standards of services and lays emphasis on superior quality of construction. RITL has one of the best managed processes along-with technology solutions in the industry for optimization of power and fuel costs. Operation and maintenance of the towers has been contracted out to various parties and there are currently more than 250 operation and maintenance points across India which allows for quick and cost-efficient service and maintenance of the towers.
RITL has entered into master services agreements with RCOM and RTL, and all other existing and new operators for providing passive infrastructure. RCOM and RTL have nominated RITL as their exclusive provider of passive telecom infrastructure. Most of these agreements are of long term around 10 to 15 years. These agreements will result in incremental growth in the tenancy rates for RTIL and thus, provide significant operating leverage.
The terms of the agreements include a monthly lease rental and pass through of key operating expenses. Most agreements provide for annual lease rental escalation at the rate of 2.5%.