Bharti Infratel in race to buy Idea, Voda towers for Rs 5,000 cr

Cash-rich Bharti Infratel is looking at the option of taking over the telecom towers of Vodafone and Idea Cellular in India at a valuation of Rs 5,000 crore. The company is also scouting for telecom tower acquisition opportunities in Sri Lanka and Bangladesh with its Rs 7,646-crore cash kitty, say bankers and analysts.

Bharti Infratel already owns a 42 per cent stake in Indus Towers - a three-way venture between Bharti, Vodafone and Idea - and possesses 84,000 towers across India. Vodafone owns 25,000 towers, while Idea owns 9,446 towers in India. Bankers say it would cost Bharti Infratel anywhere between Rs 4,500 crore and Rs 5,000 crore to buy out the towers from Idea and Vodafone.

Both Bharti Infratel and Indus Towers are market leaders in terms of number of towers and revenue generation.

When contacted, a Bharti Infratel spokesperson said: "The company has sufficient cash and debt resources available for organic and inorganic opportunities, as and when they arise. However, we believe it is premature to talk about the timing and valuation of any deal at this stage." Vodafone declined to comment. An email sent to Idea did not elicit any response.

Bharti Infratel's parent Bharti Airtel already has a presence in Sri Lanka and holds seven per cent market share. The company has recently started talks with Abu Dhabi-based Etisalat to buy out their operations in Sri Lanka. Bharti Infratel is keen to buy out towers in the island nation, while the parent company consolidates its operations in the country, bankers say.

In Bangadesh, Bharti Airtel had acquired a 70 per cent stake in Warid Telecom in 2010 and subsequently launched Airtel in Bangladesh in December 2010. It later consolidated its holding and invested $100 million to upgrade the network to 3G last year.

 

Bharti Infratel's shares have shot up 70 per cent since January and it closed at Rs 290 apiece on the BSE on Thursday. The BSE Sensex is up 29 per cent in the same period. The company, which has Rs 7,646 crore of cash as of March this year, told analysts that the company would even consider buyback if the Ministry of Company Affairs allowed it use share-premium account (at around Rs 3,600 crore) for buybacks.

A share-premium account is the account to which the amount of premium paid by a shareholder for a share is credited. This account is mainly used by a company to pay for bonus shares and write off equity-related expenses.

After the September-quarter results, Bharti Infratel chairman Akhil Gupta said the telecom industry is entering into a phase of growth led by robust data uptake. It also signed Reliance Jio as a tenant and said that it expects a jump in its revenue.

"The auctions in February 2014 gave lot of confidence and stability to the operators and a testimony to that fact is addition of close to 4,000 tenancies in this quarter for Bharti Infratel - an increase of over 100 per cent compared to the same period last year," Gupta had said.