Idea Could Exit Tower Business for Cash Comfort
Co also in talks with rival telcos to share infrastructure for 2G, 3G and 4G services
Mumbai: Idea Cellular is looking to raise funds by selling some or all of itsstakeinitstowerbusinessand has frozen hiring as part of a stringent cost-cutting drive to improve financesandbettertakeonReliance Jio Infocomm, whose entry led the No. 3 telco to post its first net loss since listing.
The company has seen “unprecedented disruption” because of Jio’s free voice and data services, which forced Idea to lower its rates, managing director Himanshu Kapania said at an earnings call with analysts on Monday. He said the sector shouldstabiliseoncethenewcomer starts charging for its services.
Kapania indicated that the worst phase was in November and December, on account of the “tsunami of incoming calls” from Jio, and thatIdeahasbeenabletoholditsown since then with its own unlimited plans. There is more stability now and average revenue per user is “holdingon,”hesaid,addingthatthe pace of Jio’s subscriber additions had slowed down in JanuaryFebruaryfromNovember-December.
The need to strengthen the balance sheet and return to profitability is paramount for Idea.
“We are open to monetising our towers as well as stake in Indus Towers. We are happy to monetise fully or partially and have no precondition,”Kapaniasaid.Ideaowns 100% of its 11,000 captive towers via a wholly-owned arm, Idea Cellular Infrastructure Services Ltd. It also has an over 11% stake in Indus Towers, a JV with Airtel and Vodafone, through Aditya Birla Telecom.Accordingtorecentmedia reports, American Tower Corp is a frontrunner to acquire Idea’s telecomtowersatanenterprisevalueof as much as ₹ 4,500 crore.