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Tower companies follow in operators' footsteps with consolidation

A KKR-led consortium is in talks to buy Indus Towers and Bharti Infratel. If the deal goes through, it will help Bharti Airtel pare debt and take on Reliance Jio

Kiran Rathee  |  New Delhi 

Tower, Telecom

The dynamics of sector has changed since 2016 with the consolidation of mobile operators becoming a reality and the country moving towards an era of four-five Now, the mobile tower are also seen to be moving in the direction of consolidation with reports of private equity firm KKR-led consortium in talks to buy Indus Towers and Bharti Infratel. If the deal goes through, it will help Bharti to pare debt, which stood at over Rs 87,000 crore at the end of June quarter. The proceeds will also give more financial strength to take on Reliance Jio, as the top operator tries to retain its leadership position in the highly competitive Indian market. It will also help and Cellular to get much-needed liquidity for the main business, which has been sliding due to Reliance Jio's impact. Both and Cellular have been losing customers for the past few months and their revenues have also declined as the operators match Jio's low tariffs. After the deal's culmination, most of Indian operators will be seen concentrating on the main business while the tower infrastructure would be looked after by other specialised firms. Reliance Infratel had also announced last December its plan to sell a majority stake in its tower unit to Canada-based Brookfield.

The deal, however, will be renegotiated as Reliance Communications has scrapped its merger with Aircel. The deal with Brookfield was based on tenancies of Aircel-RCom combine. Analysts feel the valuation may be lower than Rs 11,000 crore announced originally. The India Towers deal is a complicated one wherein and Canadian Pension Plan Investment Board (CPP) plan to help Bharti Infratel first acquire India Towers. Indus Towers, is a three-way joint venture wherein Bharti has 42 per cent, Vodafone, too, has 42 per cent and Cellular has 11.15 per cent, and the rest is with Providence Equity Partners. As per people aware of the development, Bharti Infratel will plan to acquire all the stake of the remaining partners after which the KKR-led consortium will gradually increase its stake in Indus to become a majority stakeholder. In March this year, Bharti Infratel had sold 10.3 per cent stake to KKR-led consortium and raised Rs 6,193.9 crore.

First Published: Wed, October 11 2017. 13:34 IST