Indus Towers-Bharti Infratel merger: What this means for telecom tower biz
Indus Towers-Bharti Infratel merger: What this means for telecom tower biz on Business Standard. With 163,000 towers across telecom circles, the combined entity will be locking horns with Reliance Jio, which, after buying RCom's tower assets, will have over 162,000 towers under its control
Latest News The consolidation of the Indian telecom tower business has taken a giant leap with Indus Towers’ merger into Bharti Infratel. After this move, there will be only three major players in the game (and a smaller one, BSNL), compared with as many as nine slugging it out for the mobile tower sweepstakes earlier. With over 163,000 towers across India’s 22 telecom circles, the combined entity will, after the merger, be locking horns with Reliance Jio, which, after buying RCom’s tower assets, will have over 162,000 towers under its control. And the only pure-play nontelecom tower company to remain in business will be American Tower Corporation (ATC). With a majority stake in the erstwhile Viom Networks (in which the Tatas still have a stake), and after its recent acquisition of the Vodafone and Idea tower assets, ATC will command over 78,000 towers. That is less than half of the two big boys in the game – Bharti-Indus combine and Reliance Jio. At present, there are 500,000 telecom towers in the country. Though small, state-owned BSNL is an important player, with 65,000 towers. It has already received the government’s permission to spin off this business into a separate entity. Two other players – GTL and Tower Vision, together controlling 32,000 towers –
might eventually sell their assets to one of the existing players, say analysts. Telcos say that the monetisation of the business will surely help incumbent operators generate cash to fight a bitter pricing battle, generate cash for the large new investments they are making in 4G, and also drop tariffs to keep their customers from moving to Jio. They will also require fresh investments to buy spectrum and roll out 5G in the next two years. So, for instance, Idea Cellular will be able to generate Rs 65 billion by selling its 11.5 per cent stake in Indus Towers, even if it is at a 10 per cent discount to the discovered price (it was a condition when the three partners joined to set up a common tower company). This will help the company fund the requirements arising from its merger with Vodafone, as well as a faster rollout of 4G services. If Idea and Providence cash out, Bharti Infratel will have a 37.2 per cent stake in the new merged entity, which it is already looking to sell partly, to a clutch of investors (like KKR). Bharti Airtel is planning to invest over Rs 24,000 crore this financial year for the rollout of its 4G and VOLTE services across the country. The cash can be used for this investment plan. While Vodafone has not made any announcement yet, it will also have over 29 per cent stake which it could cash out if required.
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