Bharti Airtel, Idea Cellular and Vodafone-Essar are in advanced negotiations to form a joint venture for the tower business. It has been reliably learnt that the deal would be announced sometime in December. There are plans to rope in a private equity investor once the JV is established.
Indian telecom companies like Reliance Communications have not been getting the right valuations for their tower business, prompting companies to come together. Unlocking value from the tower business, operators have been transferring capital expenses into operational expenses, which have led to lower earnings before interest taxes depreciation and amoritization (EBITDA), a key factor when it comes to valuing a telecom company, says a Lehman Brothers report.
When contacted, a Bharti spokesperson said, "As a policy, we do not comment on market speculation."
In July, RCom sold 5 per cent of its tower business stake for Rs 1,400 crore to investors like the George Soros-promoted Quantum Fund, New Silk Route and other private equity firms. Similarly, Texas-based fund Q Investment invested $500 million in tower company Xcel Telecom in October.
At the time of selling the 5 per cent stake, RCom Chairman Anil Ambani had said that this was a benchmark valuation that would pave the way for a further unlocking of value through a strategic sale or an initial public offering. It has been also mulling an additional 5 per cent stake sale in its tower infrastructure business for $9 billion, although a company spokesperson declined to comment.
Global companies like American Tower Corporation, Quipo and Crown Castle who are in the business of managing telecom towers have been eyeing the Indian market.