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

The Economic Times - - Companies: Pursuit Of Profit -

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).

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