Reliance Infratel and GTL Infrastructure have called off their merger agreement following the expiry of non-binding ‘Term Sheet’ on August 31. The deal was signed on June 27. No specific reason was offered by both concerned parties on why the deal met with failure.

Reliance Communication issued a press release on Monday regarding the future of Reliance Infratel, its tower subsidiary. RCom clarified that the company is in discussion with other strategic and financial investors for drawing up a similar deal to reduce the company’s debt from the passive infrastructure and related assets.

“Owing to the provisions of mutual confidentiality agreements, RCom cannot provide any comment on the reasons for the inability to conclude a transaction with GTL Infrastructure,” said the RCom press release.

GTL Infrastructure issued a statement saying, “Despite efforts, both parties have neither extended the Term Sheet nor entered into any definitive transaction agreements as envisaged therein. Consequently, the process of merger as originally contemplated would not take place.”

Rumors are afloat attributing reasons for the breakdown of the deal – the displeasure of RCom’s minority shareholders on the valuation, concerns on the amount of debt GTL would be forced to incur, etc. Whatever it may be, it is clear that lack of funding is not the reason for the split.

The bulk of RCom’s debt of Rs 32,000 crore was caused by RInfra. RCom was looking forward to clear a substantial portion of its debt through the deal valued at Rs 50,000 crore.

Last September, Reliance Infratel had filed papers for an initial public offering (IPO) that may have amassed up to $ 1 billion. This plan was shelved after the deal with GTL. With the deal falling through, the IPO issue may be revived.

Sunil Bharti Mittal, the founder and CMD of Bharti Airtel, the country’s top mobile service provider, fulfilled the global dream by entering into a deal with Zain Telecom of Kuwait to acquire its African assets.

The Bharti-Zain deal worth $10.7bn, including the Zain debt of $1.7bn, signed on Tuesday in Amsterdam, the headquarters of Zain’s African operations, will add another 42mn customers to Bharti Airtel, propelling it to the fifth rank among world’s top mobile service providers.

Sunil Mittal termed the deal as a ‘pioneering step towards South-South co-operation’ and said, “This is India’s first and truly post-independence multinational. We will demonstrate to the world the business model we have built. This is a game-changer for India in Africa.”

Mr. Mittal added that Bharti Airtel will remain committed to African requirements and by partnering with local governments will provide ‘affordable telecom services to the remotest geographies and bridging the digital divide’. He added that the African operations of the company will be headed by Africans with support from the Indian side.

The next hurdle for Bharti Airtel is getting necessary regulatory clearance for its operation in 15 African countries. Another priority for the company would be turning around the loss-making operations. Seven of the African units are making huge losses, including its biggest unit and highest revenue earner, Nigeria. The Nigerian and Gabonese unit of Zain may prove to be stumbling blocks with its existing issues.

Despite this, Mr. Mittal is optimistic that Bharti Airtel will emerge a winner in the deal with support from its trusted partners.

Even as economists of the world look towards India optimistically, statistics say that all is not well. The credit outlook for most Indian banks remains negative after the changes made in January earlier this year. Though the fundamental credit outlook was stable, the economic conditions still remain challenging and the number of problem loans or ‘bad’ loans still continues to be on the rise. Of course, the result of all this is an adverse effect on the quality of assets.

It has been estimated that even in the next twelve to eighteen months, things are not going to change for the better. There are no optimistic projections for the next year or two. The public sector banks, which make up the majority of the banking systems and assets, continue to hold a strong front. The concern for the deteriorating asset quality still looms large.

The Life Insurance Corporation of India is the largest life insurance company in India and also the country’s largest investor.; it is fully owned by the Government of India. It also funds close to 24.6% of the Indian Government’s expenses.It has assets estimated of 5 Trillion Rupees. It was founded in 1956.

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