GTL Infrastructure has been witnessing an extremely challenging business environment over the past one year. Saddled with heavy debt and increasing interest outflow, coupled with the issues surrounding the telecom sector has led to a battering of the stock.
In June, the stock nearly halved intraday, amidst speculation that India was supposedly reviewing the double taxation agreement with Mauritius. Technology Infrastructure, a Mauritius based company owns over 23 per cent stake in the company. The management clarified that the promoters or related entities were not selling shares. But the damage to the stock price was already done.
The proposed merger of Reliance Infratel (tower arm of Reliance Communications) with GTL Infra was called off. The deal was then valued at Rs 50,000 crore. It may have then included the debt of Reliance Infratel.
GTL Infra had stitched a deal to buy Aircel's 17,500 towers for Rs 8,400 crore. It had indicated that GTL Infra would derive assured revenues of Rs 700 crore annually from the deal from the tenants of these towers. It remains to be seen if this revenue stream actually does flow in.
In the June quarter of this fiscal, while sales increased 27 per cent over the same period in FY11 to Rs 140.5 crore, net losses widened to Rs 83.9 crore from 19.3 crore. Interest and finance costs more than doubled to Rs 105.8 crore. It remains to be seen how the company manages its debt or restructures it to manageable levels.