Three Indian Operators Consider Merging Tower Operations
Three of India's GSM networks, Bharti Airtel, Vodafone and Idea Cellular are reported to be considering splitting off their respective tower operations and merging the three companies into a super-network which would be shared by all three operators. The Business Line newspaper reports that the three companies together own more than 70,000 towers across the country.
"The talks have been going on for some time, though no finality has been given to it. The companies are yet to agree on the modalities of being joint venture partners in terms of the equity share that they would hold and other operational issues," a source close to the negotiations told the newspaper.
According to recent analyst reports, Bharti Airtel had around 40,000 towers, Vodafone had 20,000 and Idea owned almost 10,000 towers. If the three operators merged their tower operations based on volume of tower assets, Bharti could own 57% in the merged entity while Vodafone and Idea cellular could get 28.5% and 14.5% stake respectively. Naturally, the valuation of individual towers, and the ability for larger towers to be sub-leased to other operators would affect this allocation.
Bharti Airtel and Idea Cellular have already held talks regarding a tower merger, although nothing has happened so far.
Reliance Communications recently sold a 5 percent stake in it towers business, Reliance Telecom Infrastructure Limited (RTIL) for $345 million to a group of investors, giving the business an equity valuation of US$6.75 billion. RTIL has aprox 14,000 towers - so based on a parity valuation - a merged GSM tower business with 70,000 towers could be worth around US$33 billion.
Posted to the site on 7th October 2007
