Bharti Infratel, a wholly-owned subsidiary of Bharti Airtel Limited, announced on Wednesday that leading US-based private equity firm Kohlberg Kravis Roberts & Co (KKR) would invest $250 million in the company's tower business.
The investment would be made by KKR's Asia-specific private equity fund and as well as its global private equity fund. The investment by Kohlberg Kravis Roberts is in addition to the $1 billion put in by leading international investors Temasek Holdings, The Investment Corporation of Dubai (ICD), Goldman Sachs, Macquarie, AIF Capital, Citigroup and India Equity Partners (IEP) in December 2007.
Bharti Infratel owns over 20,000 mobile towers and holds an approximately 42 per cent stake in Indus Towers, the recently-announced joint venture to share passive infrastructure between Bharti, UK phone giant Vodafone and Idea, which has over 70,000 sites.
Bharti Infratel's enterprise value would be in the range of $10-12.5 billion with a final valuation to be determined on the basis of the company's actual operating performance in FY2008-09. Bharti's shares eneded down 3.8 per cent at Rs 900.40 in a weak market that fell 2.8 per cent.
India is the fastest growing mobile services market that has been adding about eight million subscribers a month. The outlook for growth is huge as rising incomes, cheap tariffs and expansion of networks to rural areas boost demand. With 233.6 million subscribers at end-December, only slightly over a fifth of the country's population has access to a mobile phone at the moment.
On Monday, rival Reliance Communications said it plans to sell 10 per cent of its tower unit in an initial public offer that media reports say could raise about $1.5 billion.
Firms like Bharti and Reliance that have a nationwide presence are set to gain as other operators expanding to smaller towns and hinterlands are looking to share mobile towers to keep costs down and boost profits amid intense price competition and a surge in low-income subscribers.
With inputs from Reuters