Reliance Communications will sell a five per cent stake in its tower subsidiary Reliance Telecom Infrastructure Ltd (RTIL) to seven institutional investors from the US, Europe and Asia for Rs 1,400 crore ($337.5 million). The sale would value RTIL at $6.75 billion. RCom is planning to list RTIL in stock exchanges in order to unlock its true value.

By hiving off RTIL as a separate company, RCoM is looking at the potential that tower business has in view of the fast growing mobile market in the country. RTIL will lease its towers to all telecom operators to set up their base stations. It will get rental from the operators for using its infrastructure.

Interestingly, the company didn’t disclose investors in the company. RCoM chairman Anil Ambani said more stake in RTIL would be sold in future through the same process and an IPO would follow. He, however, declined to give any time-frame for the venture’s listing.

Ambani said at this price, RCom’s residual 95 per cent equity is valued at Rs 26,000 crore ($6.4 billion). RTIL’s total equity valuation of Rs 27,000 crore ($6.75 billion) translates to approximately Rs 135 per RCom equity share, which is nearly 25 per cent of RCom’s current market price of Rs 565 per share. “The offering was heavily oversubscribed with a total order book in excess of 2 billion,” he said.

Ambani said “Our strategy to create a separate company for infrastructure business has resulted in tremendous unlocking of value for RCom shareholders. RTIL will be listed in the near future and provide investors another attractive opportunity to participate in India’s incredible telecom growth.”

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