Essar planning to merge tower arm with GTL

The Essar group has initiated talks on a possible merger of its tower company, Essar Telecom Infrastructure Pvt Ltd (ETIPL), with telecom infrastructure service provider GTL Ltd.

"We believe that consolidation is necessary in this industry. We are in discussions with several companies for such mergers. However, no transaction has been finalised," ETIPL Chief Executive Ajay Madan said, declining to comment on GTL.

While the Rs 925 crore GTL did not want to comment on the issue, sources close to the company said talks were on with Essar for a merger. The company had reported a net profit of Rs 39 crore on a net income of Rs 450 crore for the quarter ended December 2007.

ETIPL is a closely-held company of the Essar group. One of the largest telecom infrastructure service providers in the country, it builds telecom site infrastructure and shares it with multiple telecom operators in India.

The company has set up sites in the telecom circles of Mumbai, Maharashtra, Madhya Pradesh, Rajasthan, Chennai, Tamil Nadu, Kerala, Karnataka, Andhra Pradesh, UP (East), UP (West) and Bihar & Orissa. ETIPL has aggressive plans of installing 20,000 sites over the next three years.

GTL had recently dropped out of the race for acquiring a stake in Tata Teleservices' tower company, Tata Telecom Infrastructure Ltd, where the promoters were looking to offload a 26-49 per cent stake. GTL had said it was not interested in being a minority shareholder in any venture.

It is rolling out 25,000 towers in three years in a bid to increase its footprint, with an investment plan of around Rs 2,500 crore annually. The company has hived off its IT services business in a bid to focus on the telecom segment.

Several telecom companies have drawn up plans to list their tower business. For example, Anil Ambani-owned Reliance Infratel, which has 25,000 towers, plans to divest 10 per cent through an IPO. The company plans to spend Rs 8,000 crore and create an asset base of 60,000 towers.

Bharti Airtel also has plans to list its tower arm "" Bharti Infratel "" in a couple of years. Bharti, Vodafone, Essar and Idea Cellular too have plans to list their three-way tower venture, Indus.

Recently, Spice Telecommunications had sold all its 875 towers to Srei subsidiary Quipo Telecom Infrastructure for Rs 600 crore.