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The company, looking at all three possibilities, will take a final decision in September. Credit Suisse, Citigroup and STJ Advisors are working on Viom Networks’ proposed fund raising plan, which is open to both local and foreign investors.
The company is considering Reits as a possible vehicle for raising funds because it can offer an assured return to investors from fixed rent agreements for cellphone towers that generally run for 10 years. Sources close to the discussions said the advantage was pension funds preferred assured returns. Also many tower companies across the world have raised money by floating Reits.
Investors in Reits get a share of the rent from real estate without having to buy property. Companies earning rent from office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities and warehouses can float Reits.
Four companies, including American Tower Company, Malaysian telecom company Axiata, and private equity firms Carlyle and Providence, have bid for stakes in Viom Networks. The financial advisers had sought bids by August 19.
The bids will be opened in September when the company’s board meets to take a decision on raising capital. The board will decide after examining the bids and the viability of other routes for raising funds. An independent agency has valued Viom Networks at between Rs 22,000 crore and Rs 27,000 crore.
Viom Networks had earlier said it was looking to raise Rs 1,500 crore and might go in for an initial public offering on the London, New York or Singapore stock exchanges.
Tata Teleservices has a 54 per cent stake in Viom Networks, while the Srei Group holds 18.5 per cent. The remaining 27.5 per cent is owned by a group of financial investors, including IDFC Private Equity, SBI Macquarie, Oman Investment Fund and GIC of Singapore.
With more than 42,000 towers, Viom Networks claims to be the country’s largest independent telecom tower company. Its tenancy ratio, at 2.3 times, is higher than the industry average. In comparison the listed Bharti Infratel, which has a little over 36,000 towers and a market capitalisation of Rs 49,993 crore, has a tenancy ratio of 1.94 times. Tenancy ratio is the average of number of operators sharing a single tower at a time.
Viom Networks’ long-term debt is about Rs 6,500 crore. The company’s net profit was around Rs 100 crore in 2013-14 on revenue of about Rs 5,000 crore.
DO THE NEW
- Viom Networks is also looking to go public
- The final decision will be taken in September, when the company’s board meets
- Credit Suisse, Citigroup and STJ Advisors are working on Viom Networks’ proposed fund raising plan
- Investors in Reits get a share of the rent from real estate without having to buy property
- Viom Networks has been valued between Rs 22,000 crore and 27,000 crore
- Tata Teleservices has 54% stake in Viom Networks and Srei Group 18.5%
- Viom Networks claims to be India’s largest independent telecom tower company with more than 42,000 towers
- The company has a tenancy ratio at 2.3 times, higher than the industry average & has a long-term debt of about Rs 6,500 cr
