Bharti Airtel sells 10 percent stake in tower unit to KKR, Canada Pension

By Sankalp Phartiyal

MUMBAI (Reuters) - Bharti Airtel said it sold a 10.3 percent stake in its telecom tower unit Bharti Infratel to U.S. private equity firm KKR & Co LP and Canada Pension Plan Investment Board (CPPIB) for more than 61.9 billion rupees ($952.75 million).

Bharti Airtel sold 190 million shares in Infratel to KKR and CPPIB at 325 rupees apiece, the country's top telecom operator said in a statement on Tuesday, adding that the funds will primarily be used to reduce its debt. The selling price was a 4 percent premium to the share's closing price of 312.55 a share on Monday.

Bharti Infratel shares on Tuesday were up 2 percent to 318.80 rupees at 0709 GMT, compared to a rise in the broader Mumbai market of 0.65 percent.

The deal will leave Bharti's stake in Infratel at 61.7 percent, with the remainder owned by a slew of fund managers, including Fidelity Management & Research Company and Aberdeen Asset Management, according to Thomson Reuters data.

The transaction marks KKR's second investment in Infratel, the telecom operator said. KKR invested in the tower firm in 2008 and sold its 2.5 percent stake in 2015, according to media reports.

Analysts expect an increase of acquisitions in India's mobile tower business, as wireless providers seek to exit the business in order to reduce high debt levels and focus on their core businesses.

Earlier this month, Britain's Vodafone Group and Idea Cellular agreed to merge their Indian operations in a $23 billion deal, and said they would look to sell their mobile tower businesses.

"Just as the telecom industry is consolidating due to unviable spectrum pricing and competitive pressures, tower companies will follow," Ambit Capital said this month in a research note.

Earlier this month, Reliance Communications said India's competition regulator approved its sale of a 51 percent stake in its tower assets to Canada's Brookfield Infrastructure Group for 100 billion rupees ($1.54 billion).

India's mobile tower business is benefiting as carriers expand their 4G telecoms networks to cater to fast-rising demand for high-speed data, but it still remains a capital-intensive business that can constrain profits in the near-term, analysts said.

"Over the near to medium term, pain continues to persist for telecom and tower companies, and it's difficult to say how tenancies would develop over the long-term," Naval Seth, equity research analyst at Emkay Global said.

($1 = 64.9700 Indian rupees)

(Additional reporting by Aby Jose Koilparambil in BENGALURU; Editing by Randy Fabi)