Mumbai, 8th September, 2006: Reliance Communications Limited (“RCOM”) today announced the completion of its corporate reorganisation plan initiated in March 2006, in a record period of less than 6 months from the listing of the Company. The orders of the Hon’ble High Court of Bombay approving the reorganisation have been filed with the Registrar of Companies, and the stock exchanges.
RCOM has now become the primary operating company for the entire telecom business. RCOM and its wholly-owned subsidiaries own 100% of the networks, facilities, licenses and properties used in its business.
These include inter alia the nationwide CDMA and GSM wireless networks, the national and intra-city fibre optic networks, the FLAG and FALCON global submarine cable systems, the Reliance World retail chain, the internet data centres, contact centres, network operating centres, and other facilities used in these businesses.
The entire shareholdings of the Promoter Group in certain affiliates will stand exchanged for equity shares of RCOM, thereby providing a simple and transparent ownership structure, and completely aligning the interests of the Promoter Group with over 2 million shareholders of the Company.
The market capitalisation of RCOM increases to Rs 62,300 crore (US$ 13.4 billion) – among the top 10 companies in India.
RCOM is part of the benchmark Sensex, Nifty and MSCI indices, widely tracked by domestic and international investors.
Background to the corporate reorganisation
Under the ownership structure resulting from the de-merger of Reliance Industries Limited (“RIL”), Reliance Communications Limited (“RCOM) did not own a majority stake in any of its principal operating companies or other affiliates.
Following the de-merger, the ownership by RCOM of its principal operating companies was as follows:
-
45.34% of Reliance Infocomm Limited (“RIC”), which in turn held 100.00%
of FLAG Telecom Limited (“FLAG”);
-
45.00% of Reliance Communications Infrastructure Limited (“RCIL”);
and,
-
35.60% of Reliance Telecom Limited (“RTL”).
The balance of the equity shareholdings in RIC, RCIL, and RTL were owned entirely by the Promoters of RCOM. This legacy structure had significant drawbacks with regard to resource mobilization, transparency, and valuations.
Terms of the corporate reorganisation
In order to address the situation, on 12th March, 2006, the Board of RCOM approved a reorganisation pursuant to which (a) RIC has been merged fully with RCOM and its activities are now operating divisions of RCOM, and (b) RCIL and RTL, and FLAG have become wholly owned subsidiaries of RCOM. In addition, RCOM has acquired the 134 acre Dhirubhai Ambani Knowledge City (“DAKC) complex and several other properties used in its business which were previously privately owned.
The corporate reorganisation was effected by way of an exchange of shares under a Scheme of Amalgamation, and did not involve any cash outgo.
Issued share capital
of RCOM
Under the terms of the corporate
reorganisation, new equity shares of RCOM are being issued in exchange
for the Promoters’ direct equity shareholdings in RIC, RCIL, and RTL
and as consideration for the properties. The issued equity share
capital of RCOM will stand at 204.461 crore shares of Rs 5 each.
The market capitalisation of RCOM considering its increased equity share capital, increases to Rs 62,300 crore (US$ 13.4 billion). Accordingly, RCOM ranks among the top 10 companies in India.
Shareholding pattern
of RCOM
Post the corporate reorganisation,
the shareholding pattern of RCOM is as follows:
|
|
|
| Domestic institutions / Banks / Mutual funds | 06.30% |
| Foreign investors – FIIs, NRIs, GDRs, and others | 14.15% |
| Indian public | 12.93% |
| Reliance Anil Dhirubhai Ambani Group | 66.62% |
| Total | 100.0% |
Corporate milestones
since the listing of RCOM
In keeping with its commitment
to maintain the highest standards of governance and to maximise shareholder
value, RCOM has moved forward rapidly since its listing to optimize its
corporate and financial structure. Notable milestones include the
following:
|
|
|
| De-merger effective | 21st December, 2005 |
| Reliance ADA Group receives control of RCOM | 7th February 2006 |
| Listing on the BSE / NSE | 6th March, 2006 |
| Announcement of corporate reorganisation | 12th March 2006 |
| US$ 500 million zero coupon FCCB | 22nd March, 2006 |
| Name change to Reliance Communications Limited | 7th June, 2006 |
| GDR listing on LuxX for RIL GDR holders at de-merger | 3rd August, 2006 |
About Reliance ADA Group: Among India’s top three private sector business houses, with a market capitalization of Rs 100,000 crore (US$ 22 billion), net assets in excess of Rs 31,500 crore (US$ 7 billion), and net worth to the tune of Rs 27,500 crore (US$ 6 billion).
The group has a customer
base of over 50 million, the largest in India, and a shareholder base of
over 8 million, among the largest in the world. Through its products and
services, the Reliance - ADA Group touches the life of 1 in 10 Indians
every single day. The business presence of the Group extends to over 4,500
towns and 300,000 villages in India, and 5 continents across the world.
The interests of the Group range from communications (Reliance Communications)
and financial services (Reliance Capital Ltd), to generation, transmission
and distribution of power (Reliance Energy), infrastructure and entertainment.
About Reliance Communications:
Reliance Communications Ltd. is India's foremost integrated telecommunications
Company with over 25.7 million Indian and 600,000 global individual consumers.
RCOM's corporate clientele includes 600 Indian and 250 multinational corporations,
and – through subsidiary FLAG Telecom - over 200 global carriers.
The Company has a pan-India, next generation, integrated (wireless and wireline), convergent (voice, data and video) digital network that is capable of supporting best-of-class services spanning the entire Infocomm value chain.