GTL a likely bidder; reported valuation higher than recent deals.
Vodafone Essar, the country’s second largest telecom company, is looking to monetise its tower business, outside the portfolio it has in Indus Towers, sources say. It could look at selling as many as 7,000 telecom towers for a valuation of Rs 4,000 crore.
It has invited bids for this deal, being executed by the company itself without any bankers involved. GTL Infrastructure, the independent tower company, is known to be among the interested parties. GTL and Reliance Communications recently called off a deal where both were supposed to merge their tower assets into a $11-billion entity. Ever since, GTL is known to be looking for other opportunities.
“Over the next few months, you could see some such moves from them for fund raising, be it value unlocking or even stake sake. They could use the money to pay off their debt or even fund operations. The tower portfolio they hold is not strategic," said Harit Shah, research analyst, Karvy Stock Broking.
However, Vodafone said there was no formal sale process. "We review options for these (7,000 tower) assets from time to time," the company said in a verbal statement issued to the media.
Some analysts say it is no coincidence the reported move has come even as the parent company, Vodafone Plc, is facing bad news in terms of the Rs 11,218-crore tax case slapped on it by the income tax department. The case is currently being heard in the Supreme Court.
Tata Quippo, which has been re-named as Viom Networks, promoted by SREI Infrastructure, said they were not aware of any such deal in the offing. "We are always open for acquisitions. But we do not have any deal opportunities at the moment," said Hemant Kanoria, Director, SREI Infrastructure.
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The pegged valuation of the deal gives a value of Rs 57 lakh per tower, higher than deals which have been done in the recent past. Alok Shende, principal analyst, Ascentius Consulting, said there was a 10-15 per cent premium on the cost of setting up a telecom tower.
The last deal in the space was US company ATC's acquisition of Essar's tower portfolio. They paid Rs 45 lakh per tower. Aircel's tower business was sold to GTL for Rs 48 lakh a piece. Tata Teleservices, Maharashtra, sold its towers for Rs 52 lakh each to Quippo.
Vodafone Essar has around 16,000 base stations. It owns and operates 7,000 of these towers individually, while it holds 9,000 as a part of Indus Towers. The latter was formed in 2007 by the coming together of Bharti Airtel, Idea and Vodafone and has a portfolio of more than 100,000 towers. Bharti and Vodafone have 42 per cent stake each in Indus and Idea has 16 per cent.
Sources say Vodafone Essar can also look at the possibility of merging its individually held towers with Indus Towers. This would provide the company an option to increase stake in Indus. Officials from Indus could not be reached for comments.