Bharti Said to Sound Out Banks to Fund $8 Billion Indus Deal

(Bloomberg) -- Bharti Infratel Ltd. is sounding out banks about financing a potential offer for a majority stake in Indus Towers Ltd., India’s largest wireless tower operator, people with knowledge of the matter said. 

The company, backed by billionaire Sunil Bharti Mittal, is exploring debt fundraising as it weighs a bid for the combined 53 percent stake in Indus Towers owned by Vodafone Group Plc and Idea Cellular Ltd., according to the people. A deal could value their holding in closely held Indus Towers at around $8 billion, the people said, asking not to be identified because the information is private.

Shares of Bharti Infratel jumped as much as 3.5 percent Thursday, the biggest intraday rise in more than two weeks, and were up 1.2 percent to 371.15 rupees at 12:34 p.m.

Any acquisition would add to the $21.8 billion of deals targeting the Indian telecommunications industry over the past three years, data compiled by Bloomberg show. Deliberations are at an early stage, and there’s no certainty Bharti Infratel will proceed with an offer, the people said. The parties haven’t agreed on a valuation, and the deal structure could change, according to the people. Bharti Infratel currently owns 42 percent of Indus Towers.

“Should Bharti Infratel buy Indus Towers, it will herald increasing consolidation in an industry that has been already consolidating over the past eight years,” Alok Shende, the founder of Ascentius Consulting in Mumbai, said by phone Thursday. “Increased consolidation in the tower business will invariably translate into higher pricing power.”

Brookfield Competition

Bharti Infratel has a first right of refusal on Vodafone’s stake in the wireless tower owner, the people said. It could face competition from Canadian alternative-asset manager Brookfield Asset Management Inc., which has also been planning to consider an offer for the controlling stake in Indus Towers, people with knowledge of the matter said in March.

Representatives for Bharti Infratel, Idea Cellular and Vodafone declined to comment.

Shares of Bharti Infratel have risen 6.7 percent this year through Wednesday, giving the company a market value of about 678 billion rupees ($10.5 billion). The company may seek to raise funds after boosting its stake in Indus Towers by selling new equity to a private equity firm or other investors, the people said.

KKR & Co. and Canada Pension Plan Investment Board bought a 10.3 percent stake in Bharti Infratel in March for 61.9 billion rupees, according to stock exchange filings. The KKR consortium has approached sovereign funds about joining a potential deal to boost its stake in Bharti Infratel, people with knowledge of the matter said later that month.

--With assistance from Rebecca Penty

To contact the reporters on this story: George Smith Alexander in Mumbai at galexander11@bloomberg.net, P R Sanjai in Mumbai at psanjai@bloomberg.net, Siddharth Philip in Mumbai at sphilip3@bloomberg.net.

To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, K. Oanh Ha at oha3@bloomberg.net, Young-Sam Cho at ycho2@bloomberg.net, Timothy Sifert