GTL Infra falls 20%, becomes takeover target

GTL Infrastructure, the telecom tower arm of Manoj Tirodkar’s GTL Ltd, crashed 20 per cent to Rs 7 on Thursday as the company’s new shares got listed on the stock exchanges. With its low promoter stake and market capitalisation at an all-time low, bankers said the company had now become an easy takeover target for predators.

The market capitalisation of GTL Infra —owner of 32,500 telecom towers — was at Rs 1,330 crore on Thursday, and the promoters stake was down to 20.45 per cent from 23.75 per cent as on September, as it issued new shares to its bondholders. “There are no takers for the company, though its assets have been up for sale for a long time,” an investment banker said, asking not to be quoted. “As the stock tanks, the pressure on the promoters to exit the tower company goes up,” he said.

The company declined to comment on the issue. Analysts said the latest trigger for the fall in GTL Infra’s stock was the listing of new shares issued to its bondholders. In November, GTL Infra had converted 35 per cent of its $319 million, or Rs 1,737 crore, of US dollar-denominated notes into shares at a cost of Rs 10 each. The rest of the debt was swapped for fresh convertible bonds due in 2017.

Investors were also given an option to get these bonds converted into shares in 60 days at a conversion price of Rs 12.64. Many of these new shareholders exited today, analysts said.

BAD SIGNALS

• Company stock tanks to Rs 7
• GTL Infra owns  32,500 telecom towers
• To sell overlapping towers acquired from Aircel
• Expects tower consolidation in future

Another banker said there could be takers for GTL Infra’s telecom towers, provided the valuation was right. “This is going to be a distress sale. If the company does not sell, the lenders would make sure its telecom assets are sold,” he said.

With Bharti Infratel, which has 34,000 towers and stake in Indus Towers, also getting listed at a good valuation, bankers say GTL Infrastructure’s assets are ripe for a takeover. For the last fiscal, GTL Infra reported revenues of Rs 1400 crore and an Ebidta of Rs 761 crore.

But insiders say GTL, which owns 20 pc stake in GTL Infrastructure, does not want to sell the company as it thinks the valuation is too low. The parent firm, GTL itself is facing a crisis of confidence as it lost 1500 employees and clients after both GTL and GTL Infrastructure faced an unprecedented bear attack in June 2011. Last June, GTL shares declined as much as 62.3 percent in one day and on the same day, GTL Infrastructure fell by as much as 48.5 percent. The bear attack came within months of GTL and Anil Ambani’s Reliance Infratel scrapped a plan to merge their operations.

Since then, the stocks of GTL and GTL Infrastructure, the part of Global group, are just going downwards. On Thursday, GTL stock fell 7.5 per cent to to Rs 28.45 a share with a market capitalization of just Rs 446 crore. Both GTL and GTL Infra have also been referred to the corporate debt restructuring by its lenders as it defaulted on payments.