260,000 towers up for grabs as telcos look to repay debt and boost network

The value of each cell tower varies from Rs 30 lakh to Rs 70 lakh, depending on the number of tenants and the length of the contracts

Two in three cell towers in the country are up for sale as their owners, mostly telecom companies, try to repay their debts and upgrade networks. 

Over 65 per cent of the 400,000-odd cell towers have been put on the block, according to some estimates, by Bharti Airtel, Vodafone, Idea Cellular, and Reliance Communications, apart from independent tower companies GTL Infrastructure and Tower Vision. 

Bharti Airtel announced on Tuesday that it would consider selling its stake in Bharti Infratel to private investors, a move that might give them a controlling interest in the tower infrastructure firm.  

On the other side of the table are three big buyers — private equity fund KKR along with consortium partners, American Tower Corporation (ATC), and global asset management company Brookfield — scouting for attractive deals in what is clearly a seller’s market. Analysts reckon they will fork out around Rs 90,000 crore — averaging out the lowest and highest prices — to buy cell towers.

The value of each cell tower, according to private equity funds, varies from Rs 30 lakh to Rs 70 lakh, depending on the number of tenants and the length of the contracts.

For telecom companies, the monetisation of their cell towers will help repay debt and finance the expansion of 4G LTE services, where they are battling the onslaught of newcomer Reliance Jio. For Reliance Communications, selling the towers is integral to its Rs 45,000-crore debt restructuring plan.

The buyers see this as a stable business, especially after consolidation in the telecom industry, with assured 8-10 per cent long-term returns on investment annually. As telecom companies expand their data networks, buyers expect renewed demand for cell towers from Reliance Jio and Bharti Airtel.
 

Reliance Jio is planning to increase its tower infrastructure from 175,000 — of which it owns 60,000 —to 250,000 in the next few months. With about 185,000 towers, Bharti Airtel is also expected to put up more to ensure there is no gap with Reliance Jio. And as 5G networks roll out over the next few years, telecom companies will need more towers to enable higher speed data.

ATC, which control Viom Networks with a 51 per cent stake, has over 60,000 towers. About 40 per cent of Viom Networks’ business is derived from Tata Teleservices and Telenor, both of which have sold their businesses. 

Sources said Tata Teleservices’ buyer, Bharti Airtel, would retain at least half the tenancies. 

Viom Networks also has an assurance that Tata Teleservices will pay Rs 6,000-7,000 crore for the residual life of its contract that ends in 2023. 

ATC is in talks to buy 20,000 towers owned by Idea Cellular and Vodafone, according to sources, which, if successful, could neutralise the loss arising out of the Tata Teleservices development. 

Brookfield, too, is interested in these towers. And both are looking at smaller players like Tower Vision and GTL Infrastructure, which together have 37,000 towers. 

ATC did not comment on the developments, and Tower Vision did not respond to an email. The GTL Infrastructure spokesperson pointed out the company had received expressions of interest from 19 investors.

Brookfield is also revaluing its offer to buy Reliance Infratel after the failure of Reliance Communications’ merger with Aircel. Reliance Communications has also decided to stop providing 2G services, which means fewer tower tenants for the buyer. 

Expectations are, a deal with over 43,600 towers, in which Reliance Jio is a key tenant, could go through for anything between Rs 8,000 crore and Rs 13,000 crore for a 100 per cent stake. Earlier, Brookfield had valued Reliance Infratel at over Rs 20,000 crore.

KKR and a consortium of partners already hold 10.3 per cent equity in Bharti Infratel, which has announced it is planning to increase its 42 per cent stake in Indus Towers by buying shares from partners Idea Cellular, Vodafone, and Providence Equity Partners. 

Analysts said once Indus Towers became a wholly owned subsidiary of Bharti Infratel, the KKR-led consortium could increase its stake substantially, make an open offer and take a controlling interest in Bharti Infratel. In the process, it will control over 160,000 cell towers across the country, with a 40 per cent share of the market.