Faculty Scholarly Dissemination Grants

Title

Strategic Alliance - Economies of Scle and Reliance Communications and GTL Infra

Department

Finance

College

Seidman College of Business

Date Range

2010-2011

Keywords

Mergers, Divestment, Means of Financing, Mumbai Stock Exchange Section 4: Economics

Abstract

Strategic Alliance - Reliance Communications and GTL Infrastructure Ltd Vertical Disintegration By Reliance Communications and GTL Infra's Capture of Economies of Scale Case Description In June 2010 Reliance Communications (referred to as R. Com. hereafter), India's second largest cell phone service provider announced it agreed to merge its cellular phone communications towers'+H29 business with that of GTL Infrastructure Ltd. (referred to as GTL Infra hereafter). Both partners in this strategic alliance are publicly traded entities listed on Mumbai Stock Exchange. This case is an example to demonstrate the employment of a strategic response to reduce the burden of debt by a company in a high growth industry getting increasingly competitive. This case highlights the organizational zeal of a company that plans to elevate its relative position in the hierarchy of a growing passive telecom infrastructure industry. Readers are expected to evaluate the feasibility of the multibillion dollar transfer of assets that involve cash and stock as media of exchange. The Case will involve students to consider the economic factors in determining the financing of this merger. The seller and buyer are both in heavy debt. The seller wishes to lower its debt level and the buyer has to be innovative in devising new ways of hybrid financing.

Conference Name

3rd International Symposium Education Today: Between Theory and Practice

Conference Location

Timisoara, Romania



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