Farallon, Blackstone to bid for RCom tower stake

US-based asset management firm Farallon Capital Management, private equity firm Blackstone and Tilman Financial are among eight bidders looking to buy a 50 per cent stake in Reliance Infratel, cell tower arm of Anil Ambani's Reliance Communications (RCom).

The other bidders include private equity firm Carlyle and US-based American Tower. They are expected to give initial bids in a day or two and the final bidders will be selected in the next three weeks.

"About eight firms will submit their bids. Two or three will be shortlisted for the final round in a few weeks and the deal is expected to announced by September-October," a person close to the development said.

MONETISING ASSETS

• Reliance Infratel looking to sell 50% stake
• Farallon Capital Management, Blackstone, Carlyle, ATC to submit bids
• Expected valuation of Rs 25,000-30,000 cr
• Deal expected to close by September-October
• Reliance Infratel has 45,000 towers and is the third largest player in the tower industry

RCom is seeking a valuation of Rs 25,000-30,000 crore for its tower arm. This includes debt of about Rs 8,000 crore, to be transferred to the tower company once the stake sale is completed. Currently, the debt is on the books of RCom.

UBS, Standard Chartered and SBI Capital Markets are the investment bankers involved.

When contacted, RCom declined to comment on the matter. However, in a recent filing to the BSE, it said, "The company has started a process to monetise the valuable tower and fibre assets held in its subsidiary, Reliance Infratel, within the current financial year… the process is continuing."

Reliance Infratel has about 45,000 towers. RCom owns 96 per cent of Reliance Infratel and the rest is held by minority and institutional investors, including Drawbridge Towers, Investment Partners B (Mauritius), George Soros' Quantum (M), NSR Partners and others.

Indus Towers, a venture between Bharti, Vodafone and Idea, is the leading player in the Indian cell tower industry with 116,454 towers, followed by Bharti Infratel, with 86,397 towers. Bharti Infratel holds a 42 per cent stake in Indus Towers.

According to experts, telecom players are looking to expand their network coverage for fourth generation services, which will mean addition of towers. With data consumption set to increase, data towers will rise substantially.

There are about 400,000 telecom towers in India, a number that is estimated to increase by 3 per cent a year to over 511,000 by 2020. Of these, 30,000 towers will only support data sites, according to a report by Deloitte.

The tenancy ratio in the Indian telecom tower industry is expected to grow from 1.77 in 2014-15 to 2.48 by 2020, primarily due to the focus on data.