Bharti may list tower unit to raise $1 bn -Governance Now

Bharti may list tower unit to raise $1 bn

To sell 10 per cent stake to fund expansion

PTI | July 13, 2011

Telecom services provider Bharti Airtel is mulling to list its tower unit, Bharti Infratel, by selling 10 per cent stake to raise around USD 1 billion (nearly Rs 4,500 crore) to fund expansion.

According to industry sources, "Since the company had raised USD 1.25 billion in 2007-08 from PE firms, it needs to give them (investors) an exit option."

They said the proposed Initial Public Offer (IPO) is likely to value the company at about USD 10 billion.

When contacted Bharti's spokesperson declined to comment and termed the reports as "speculative".

Bharti Infratel deploys, owns and manages passive infrastructure in 11 telecom circles in India. It also holds 42 per cent share in Indus Towers (a joint venture between Bharti, Vodafone and Idea).

It is also learnt that Bharti Infratel has informally appointed Standard Chartered Bank and Morgan Stanley as merchant bankers and is also in discussion with two other investment banks.

International investors Temasek Holdings, Investment Corporation of Dubai (ICD), Goldman Sachs , Macquarie, AIF Capital, Citigroup & India Equity Partners (IEP) had in December 2007 invested USD 1 billion in Bharti Infratel. This was followed by KKR's investment in February 2008.

So far, no tower company is listed in India, although two other companies had drawn up plans to do so and even filed draft prospectuses with the markets regulator. Anil Ambani controlled Reliance Infratel intended to list the company in 2008-09, and last year, Viom Networks, a joint venture between Tata Teleservies and Kolkata-based Quippo Infrastructure, had planned an IPO.

Bharti Infratel has 32,792 towers in 11 circles, excluding the 35,254 towers in 11 circles for which the right of use has been assigned to Indus with effect from January 1, 2009.

India's telecom sector, popular among investors for almost a decade since 2000, has witnessed a value ersosion due to stiff competition and the recent 2G spectrum allocation scam, sources said.

Apart from a partial stake sale by private equity firms, the company would also issue fresh shares for the IPO to fund its planned expansion.

Last fiscal, the tower company reported an operating profit of Rs 3,159 crore on a turnover of Rs 8,515 crore, which includes proportionate share of its revenues in Indus Towers.

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