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Investment bankers have suggested that Bharti Airtel's top management hive off the company's African telecom tower assets into a separate company and then sell it to its listed subsidiary, Bharti Infratel, at a valuation of $2 billion.
This way, while Bharti Airtel would be able to raise the much-needed funds for its own growth and help pay off its high-cost loans, its infratel arm would be able to expand its business, a banker close to the development said.
Bharti has already initiated the process to hive off its telecom towers in Africa which is expected to be completed by the end of the financial year.
Based on recent valuation of around Rs 88 lakh a tower, Bharti Infratel would have to shell out close to Rs 11,300 crore to buy out the company's assets, a banker said.
When contacted, a Bharti spokesperson said: "We have no such plans and we deny this speculation."
The recent acquisitions in the tower business include the deal of Tanzania's Millicom for 1,000 towers and MTN's deals in Ivory Coast, Uganda and Cameroon. These transactions were done at enterprise valuation of Rs 7.3 million to Rs 10 million a tower.
"This is one of the ideas given to Bharti Airtel's management. Now, it is up to them to take a call on this," a source said. No decision has been taken by Bharti on this so far.
Bharti Airtel owns 80 per cent stake in Bharti Infratel which, in turn, owns all the telecom towers hived off by Bharti Airtel earlier. Bharti Infratel also owns a 42 per cent stake in Indus Towers, a three-way venture among Vodafone, Bharti and Idea Cellular.
Bharti Airtel owns around 18,370 towers in Africa; of those, it owns 12,800 towers, while the rest are leased. In India, Bharti Infratel has 34,668 towers in its 11 circles of operation. The company has made good profits of Rs 1,009 crore for the financial year ended March 2013 and will generate cash in the next few years.
Today, Bharti Infratel's shares closed at Rs 175 apiece, taking its market capitalisation to Rs 33,043 crore. The scrip of its parent Bharti Airtel was quoting at Rs 321 a share and its market cap was Rs 1,22,261 crore.
Early this month, Bharti Airtel issued 199.87 million new shares at Rs 340 apiece to Qatar Foundation Endowment for close to Rs 6,796 crore which will help it strengthen its capital structure and raise funds to pay for spectrum in the circles where those are coming up for renewal.
BANKERS' PRESCRIPTION
* Bharti Airtel should hive off African tower assets
* Bharti Infratel should look at buying African tower assets
* Bharti Infratel to invest $2 bn in buying African towers
* Funds to help Bharti Airtel pay off its loans, bid for spectrum
