Bharti Infratel Looks To Take Over Indus Towers
The Sunil Bharti Mittal-backed company will look at buying stake in Indus Towers in one or more tranches.
Bharti Infratel Ltd. is exploring buying additional stake in Indus Towers Ltd. to create the world’s largest wireless tower operator.
The Sunil Bharti Mittal-backed company will look at buying stake in Indus Towers in one or more tranches with the aim to make it a subsidiary or wholly owned unit of the company, it said in a media statement today. The combined entity would have more than 1,60,000 towers, ahead of American Tower Corp.’s 1,44,000 across four regions.
Bharti Infratel has a 42 percent stake in Indus, while Vodafone Group Plc and Idea Cellular Ltd. together hold additional 53 percent of the tower company. Bharti Infratel has not specified from which company it would buy shares and at what valuation.
Currently, Bharti Infratel is valued at 11.97 times its earnings before interest, tax, depreciation and amortisation. Applying the same valuation to Indus Towers – since the company is not listed – the enterprise value for Indus Tower comes to around Rs 91,866 crore on trailing 12-month basis. This means that a 58 percent stake buy would cost Bharti Infratel close to Rs 53,283 crore, according to the data compiled by BloombergQuint. The company had cash reserves of close to Rs 6,724 crore as of September 30.
Bharti Infratel is sounding out banks about financing a potential offer for a majority stake in Indus, people with knowledge of the matter had told Bloomberg in June.
Limited Synergies
The tenancy ratio – the number of tenants, or operators who have put up their antennae on the towers – for the merged entity will be close to 2.42 times, ahead of the industry average of nearly 2 times. It will have a market share of 39 percent.
Bharti Infratel and Indus Towers have overlapping operations in four circles – Haryana, Uttar Pradesh (West), Uttar Pradesh (East) and Rajasthan. The overlap in areas of operation may mean that merger synergies are limited but will expand tower footprints across India.
