Indus Towers-Bharti Infratel: World’s Biggest Tower Operator In The Making?
As foreign investors chase telecom infrastructure assets in India, a potential merger between Indus Towers Ltd. and its smaller rival Bharti Infratel Ltd. will create the world's biggest telecom tower company, replacing the American Tower Corp.
The combined entity will own more than 1.6 lakh towers, ahead of ATC's 1.47 lakh across four regions globally. It will also have higher margins than Indian rivals and more than 40 percent market share.
A consortium led by KKR & Co. is looking to combine Indus Towers and Bharti Infratel, a subsidiary of Bharti Airtel Ltd., according to a Bloomberg report. The investors plan to first boost their stake in Bharti Infratel, and then make an offer for the combined 53.15 percent stake in Indus Towers owned by Vodafone India Ltd. (42 percent) and Idea Cellular Ltd. (11.15 percent), the report said quoting people familiar with the development. Bharti Airtel also owns a 42 percent stake in Indus Towers while private equity investor Providence holds the remaining 4.85 percent.
A Bharti Group spokesperson told BloomberQuint that the company does not comment on market speculation. In a separate statement, Bharti Infratel Ltd. said the company evaluates various opportunities in an ordinary course of business and as a policy does not comment on speculative reports.
A fragmented Indian telecom tower space has more than 10 operators, including the government-owned Bharat Sanchar Nigam Ltd. and Mahanagar Telephone Nigam Ltd., the second biggest player that does not share its tower assets with rivals. Foreign investors like Brookfield Asset Management Inc. and ATC have also been ramping up their presence in the tower business.
Brookfield has signed a binding agreement with Reliance Communications Ltd. to acquire its tower assets, making it the country's third largest operator. Viom Networks Ltd., in which ATC acquired a 51 percent controlling ownership, ranks fourth on the list.
Brookfield and ATC are also said to be in the fray for Vodafone and Idea Cellular's independent and standalone towers, according to Bloomberg.
The Indus-Bharti Infratel combine will have close to 1.61 lakh towers, more than what the next three operators will own put together.
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Also Read: Bharti Airtel Sells 10.3% Stake In Bharti Infratel For Rs 6,200 Crore
Its tenancy ratio, or the number of operators that put up their antennae on the towers, would be close to 2.3 times, ahead of the industry average of 1.9 times.
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The merged entity will also have better margins and better revenue per tower when compared to peers.
The companies also operate in non-overlapping circles. Bharti Infratel largely owns assets in B and C circles, while Indus Towers owns in metros, and A and B circles.
Also Read: KKR Said to Woo State Funds for $12 Billion Tower-Firm Deal
(Adds Bharti Infratel's response on the report about the potential merger).
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