Birlas may sell stake in telecom towers, exit fertiliser, insulator businesses

The Aditya Birla group is looking to sell minority stake in multiple businesses including telecom towers, financial services, while completely exiting fertiliser and insulator companies. This is part of group’s plan to merge Grasim and Aditya Birla Nuvo to unlock value in various businesses and sell businesses that do not fit into its long term plans.

The group has already started consolidating its telecom towers businesses under Idea Cellular’s subsidiary, Idea Cellular Infrastructure Limited so as to sell stake in the company that owns 9,000 towers.

Idea also holds 16 per cent stake in Indus Towers — a venture with Bharti Airtel and Vodafone who own 42 per cent stake each.

The Birla plans to sell stake in telecom tower business is expedited with US-based private equity firm, Providence evincing its interest to sell its 16 per cent stake in unlisted Aditya Birla Telecom Ltd ABTL, in turn, owns Idea’s Bihar circle and 16 per cent stake in Indus Towers.

Idea Cellular’s shares were trading flat at Rs 81 a share as on Wednesday. When contacted, a group spokesperson said the information to sell telecom tower business is speculative.

A banker privy of group’s plans said the group could look to sell 5 per cent stake in its financial services business to raise close to $200 million. Besides, as part of the scheme, some of the non-core businesses under Grasim including urea and insulator would be sold completely.

“These businesses do not fit in terms of long term strategy of Grasim. These businesses are however generating steady cash flows and there are no capex commitments here. A divestment option can be considered if a good opportunity comes through over time,” the source said.

Total revenues and earnings before interest and tax (EBIT) of non-financial business are Rs 5,500 crore and Rs 640 crore with urea and insulator accounting for 40 per cent of Grasim’s EBIT.

According to a banking source, the process to sell the fertiliser business has already been initiated and the sale would be completed by April-May next year once the merger between Nuvo and Grasim is through.

The sale will help the new merged entity to unlock value in its subsidiaries and generate cash to fund its new age businesses.

What’s on sale?:

Fertiliser business

Insulator business

Telecom Towers

5% stake in financial services