Bharti, Vodafone, Idea to merge tower business

Indus Towers to enjoy enterprise value of Rs 150,000 cr

Three leading GSM operators, Bharti, Vodafone-Essar and Idea Cellular, have joined hands to set up an independent tower company. While Bharti and Vodafone- Essar will each have 42 per cent stake in the new company to be called Indus Towers, Idea Cellular will have 16 per cent stake.

The three companies will merge their existing passive infrastructure, including towers, in 16 telecom circles. Sources say that the capital investment in these towers is to the tune of over Rs 35,000 crore and the enterprise value of the new company will be around Rs 150,000 crore.

Indus plans to scale up the number of towers to around 200,000 towers in the next two to three years. The new company will control around 60 per cent of the over 120,000 towers in the country.

Bharti Infratel, the company which holds the tower assets of the Bharti group, has a 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 the seven remaining circles (20,000 towers).

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

The number of towers being merged into the new company is in proportion to the shareholding in the new company.

The valuations of tower infrastructure has been going through the roof, especially after Reliance Communications was able to divest 5 per cent equity in its tower company, Reliance Telecom Infrastructure, to seven investors for Rs 1400 crore.

The deal gave the company an enterprise valuation of Rs 27,000 crore.

The company, which controlled over 13,000 towers when the divestment was made, is currently looking at a further 5 per cent divestment.

But this time, the company is looking at an enterprise value of $ 9 billion with over 16,000 towers.

The Ruias, who have a 33 per cent equity 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 will remain separate and compete with Indus. The Tatas have set up an independent tower company of their own.

International tower companies have also been on the prowl looking at starting their own infrastructure or picking up stake in infrastructure companies run by Indian telecom companies. These include Amercian Tower Corporation and Global Tower.