BackViom set to sell majority stake to ATC
Srei Infrastructure Finance, which holds an 18% stake in Viom, will dilute its entire stakeholding in the deal
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Mumbai: Viom Networks Ltd, the second largest telecom tower company in India, is set to offload a majority stake to American Tower Corp. (ATC), according to two people familiar with the negotiations. Kolkata-based Srei Infrastructure Finance Ltd, which holds 18% stake in Viom, will dilute its entire stakeholding in this deal, they said.
The deal has been in the making for quite some time and an announcement is expected shortly, said the first person quoted above. Mint could not ascertain the size of the deal. On Tuesday, CNBC-TV18 reported that ATC is buying a 51% stake in Viom at an enterprise valuation of ₹ 20,000 crore.
ATC is a leading independent owner, operator and developer of communication real estate with a portfolio of approximately 96,000 communication sites, according to the company’s website.
Viom was formed through a joint venture between Tata Teleservices Ltd and Quippo Telecom Infrastructure Ltd (a part of the Srei Group) in 2009. With more than 42,000 telecom towers, it is India’s second largest tower company after Indus Towers Ltd. Tata Teleservices owns 54% of the company while Quippo owns 18%. The remaining stake is held by private equity firms SBI Macquarie Infrastructure Fund, GIC Investments Pte Ltd (Singapore), IDFC Private Equity and Funderburk Mauritius Ltd (Oman Investment Fund).
Except SBI Macquarie, the rest of the investors are offloading their stake, second person said.
Credit Suisse and Kotak Mahindra are advisors to the transaction.
A spokesperson from Srei declined to comment. Emails sent to spokespersons at Viom Networks, ATC, GIC Investments, IDFC Private Equity and Oman Investment Fund did not elicit any response.
In a statement to the stock exchanges on Tuesday, Srei Infrastructure Finance said the company, along with other investors in Viom, are looking at either diluting or divesting their stake in Viom. “..as and when it gets finalized, we would keep the markets informed," the statement said.
Hemant Kanoria, chairman and managing director at Srei, said the company is yet to finalize the deal. “We are evaluating all options and talking to several investors. However, nothing has been finalized. We will make an announcement once it is signed," Kanoria said.
On Tuesday, shares of Srei Infrastructure Finance closed at ₹ 58.15 per share, up 4.87% on the BSE.
There are close to 400,000 telecom towers in India at present and the number is estimated to increase at a compounded annual growth rate of 3% over the next four-five years.
The total number of towers is expected to grow to more than 511,000 by fiscal year 2020, of which 40,000 towers are expected to be only supporting data sites, a Deloitte report on the Indian tower industry in June said.
“The decline in growth of voice usage along with industry developments and regulations in India have raised concerns about the growth of independent tower businesses, thereby affecting their cash flows and debt repayments. However, exploding data traffic is leading to in-building solutions and smaller cell sites, and is expected to drive growth of the Indian tower industry in the future," the report added.
According to a 24 September report in The Economic Times, Anil Ambani-owned Reliance Communications Ltd is also considering a complete exit from the telecom tower business and is in talks with US-based Farallon Capital, the Carlyle Group, Tillman Capital and ATC to sell its stake in unit Reliance Infratel.
Last month, the Indian cabinet had approved a proposal to hive off Bharat Sanchar Nigam Ltd’s telecom towers into a separate company in a bid to unlock value from the assets.
On Tuesday, Bharti Airtel Ltd said the company has completed the sale transactions in seven countries for approximately 8,300 towers representing close to 60% of its total tower base. The total value of proceeds from all the concluded transactions in these seven countries is over $1.7 billion and is being utilized for reducing the debt of the company, Airtel said.
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