Race for Towers Owned by Vodafone, Idea Heats Up
SUITORS ATC, Brookfield & IDFC Project Equity have put in bids in range of $1.1-1.2 b
Kalyan Parbat, Baiju Kalesh & Sneha Shah
Kolkata | Mumbai: The race to acquire the 20,000 towers owned by Vodafone India and Idea Cellular is intensifying. Boston-based American Tower Corp (ATC), Canadian alternative asset management fund Brookfield and local infrastructure fund IDFC Project Equity Infra have each submitted bids in the $1.1-1.2 billion range for the towers, with a decision likely in a few weeks, three people aware of the matter told ET.
The bids come as Vodafone India and Idea, respectively the country’s second and third-largest mobile carriers, are reckoned to have started integrating networks following their merger plan getting the antitrust regulator’s approval, they said.
“The bids for Vodafone India’s 10,926 standalone towers have been submitted to Morgan Stanley, while those for Idea’s 8,886odd standalone ones have been submitted to Bank of AmericaMerrill Lynch,” said one of the people cited above.
Vodafone’s own towers are reckoned to be valued at $650-700 million, while Idea’s are pegged at $500-550 million, the second person cited said.
There were 15,418 tenants on Idea’s 8,886 standalone towers at a tenancy ratio of 1.7 while there were 15,846 tenants on Vodafone India’s10,926 towers at a tenancy ratio of 1.5, according to an investor presentation by Idea on March 20, following the announcement of its proposed merger with Vodafone India. ET has seen this presentation. Morgan Stanley and Bank of America-Merrill Lynch are managing the captive tower sales for Vodafone India and Idea, respectively. The people cited above said a final decision on the sale of the combined tower portfolio is likely in a few weeks and is expected to be a Vodafone-Idea joint decision. “Any decision to sell the towers separately or collectively will hinge on whichever format commands a higher enterprise valuation as both Vodafone India and Idea will try to secure the best monetisation deal for their standalone towers in the run-up to integration of their networks,” said a third person.
Vodafone and Idea “could demand a premium” if they decide to sell their combined tower portfolio on the ground that the buyer will “enjoy the advantage of scale with a wider network of towers”, the person said.
In the past few months, Vodafone India and Idea had reached out separately to potential bidders but they are now likely to negotiate jointly with key regulatory clearances coming through for the merger, he said.
Vodafone India, ATC, Brookfield and Morgan Stanley declined to comment while there was no response to emails from Idea, Bank of America-Merrill Lynch and IDFC Project Equity.
The proposed Idea-Vodafone merger — which has been cleared by the Competition Commission of India (CCI) and has also received a conditional nod from the Securities and Exchange Board of India (Sebi) — will create India’s biggest phone company by subscribers.
The two telcos are also looking to monetise their stakes in Indus Towers, the country’s largest tower company, in which Vodafone owns a 42% stake and Idea11.15%. Providence owns the remaining 4.85%. Bharti Airtel tower unit Bharti Infratel, which owns 42% of Indus, is believed to be eyeing the combined stake to consolidate its tower portfolio, having roped in two deep-pocketed investors — KKR and Canada Pension Plan Investment Board (CPPIB).