Mumbai, June 27: Reliance Communications Ltd (R-Com) will hive off its tower assets and merge them with GTL Infrastructure Ltd for Rs 50,000 crore ($11 billion) in a cash-and-stock deal.

According to the agreement, 50,000 towers of Reliance Infratel, a subsidiary of R-Com, will be spun off into GTL Infra. R-Com holds 95 per cent in Reliance Infratel. The boards of R-Com, Reliance Infratel and GTL Infra approved the deal today.

The move will create the world’s largest independent telecom infrastructure entity and help to reduce the debt of the Anil Ambani flagship company, R-Com.

GTL Infra is part of Global Group led by Manoj Tirodkar , which has over 30,000 towers. The deal is part of the restructuring of Reliance Infratel that was announced recently.

By spinning off its telecom towers, R-Com will get cash and its two million shareholders, including Anil Ambani, will receive shares of the merged entity.

In a statement issued today, R-Com said the details of the cash infusion and the share-swap ratio would be finalised later with the help of independent valuers and advisers. It is being speculated that Anil Ambani may eventually own 26 per cent in the merged entity, with other R-Com shareholders holding 24 per cent.

Though R-Com did not disclose further details, it is believed that the deal may include the debt of around Rs 15,000 crore of Reliance Infratel.

For R-Com, the deal is significant as it will bring down the debt in its books. Sources estimate R-Com’s consolidated net debt at Rs 33,000 crore, including the loan taken for a 3G auction. R-Com has announced that it will offload a 26 per cent stake to investors. Sources said after this sale, R-Com could become a zero debt company.

There was a strong buzz that Mukesh Ambani might acquire a stake in R-Com’s tower assets. It now remains to be seen whether the elder brother will be a contender to pick up the 26 per cent stake in R-Com. Earlier, Mukesh scooped up a 95 per cent stake in Infotel Broadband Services — the only company to bag a pan-India licence for wireless broadband spectrum.

Industry circles also do not rule out the possibility of Reliance Industries acquiring a stake in GTL Infra.

After the deal with GTL Infra, the merged entity will have more than 80,000 towers and tenancies from over 10 operators such as R-Com, Aircel, Etisalat, MTS, Uninor, Videocon Mobile, Tata Teleservices, Vodafone and STel.

R-Com is hopeful that the merged entity will see higher tenancy ratios with a spurt in demand from existing 2G players, besides the winners of 3G and broadband.

The interest of R-Com as the largest tenant of the merged entity will be protected through appropriate contractual arrangements, the statement added.

The proposed transaction is subject to necessary approvals and due diligence. The deal is expected to be completed over the next six months.

According to R-Com, Reliance Infratel Ltd is planning an initial public offering and has filed a draft red herring prospectus with Sebi.

After the deal with GTL, Reliance Infratel will own fibre optic network of over 200,000 km and related assets.