Bharti, Idea, Vodafone float Indus Towers

Three leading GSM operators, Bharti, Vodafone-Essar and Idea Cellular, have come together to set up an independent tower company Indus Towers.

Bharti and Vodafone-Essar would have 42% equity stake each in the new company while Idea Cellular will have a stake of 16%.

The three companies will merge their existing passive infrastructure in 16 telecom circles consisting of over 70,000 towers. Sources say the capital investment in the towers is over Rs 35,000 crore, and the enterprise value of the new company would be around Rs 1,50,000 crore. The plan of the company is to reach 200,000 towers in the next two-three years.

Bharti Infratel - the company which holds the tower assets of the Bharti group - has presence in 23 circles with around 50,000 towers. While it will transfer its passive infrastructure assets in 16 circles (30,000 towers), it will run the business on its own in seven circles (20,000 towers).

Idea Cellular has transferred the business (around 10,000 towers) in nine out of the 11 circles, and Vodafone-Essar has merged its entire infrastructure (30,000 towers) in 16 circles in Indus Towers.

Valuations of  tower infrastructure has been going through the roof, especially after Reliance Communications was able to divest 5% equity stake to seven investors in its tower company Reliance Telecom Infrastructure at Rs 1,400 crore giving the company an enterprise value of Rs 27,000 crore.  The company controlled over 13,000 towers at the time of exeucuting the deal. The company is currently looking at a further divestment of 5%, but is looking at an enterprise value of $9 billion (Rs 35,500 crore) with over 16,000 towers.

The Ruias who hold 33% stake in Vodafone-Essar have also set up an independent tower company, which currently controls over 4,000 towers. Executives of the company said that this venture is independent of Indus, and will compete with them in the market place.

The Tatas have also set up an independent tower company.

Internationonal tower companies, including Amercian Tower Corporation and Global Tower, have been on the prowl looking at starting their own infrastructure or picking up a stake in infrastructure companies.