Mumbai: Gurgaon-based Independent Mobile Infrastructure Pvt. Ltd (IMIL), a telecom tower company founded by a former Goldman Sachs investment banker, is exiting the business after competition intensified in a crowded market, according to four persons familiar with the development.
The company, which manages around 300 towers across 10 telecom circles, or licensed areas, plans to sell the infrastructure and cease operations, said the four persons, who belong to the telecom industry and didn’t want to be identified.
Set up in 2006 by Jide J. Zeitlin, a former global chief operating officer of Goldman Sachs’ investment banking business, IMIL is struggling in a market crowded with eight other independent telecom tower operators. Such firms lease out the towers to mobile-phone service providers.
“IMIL has a corporate policy of not responding to rumours,” IMIL company secretary Sanjay Tiwari said in an email response to questions from Mint. “IMIL is not, however, winding up operations,” he said, without elaborating. A follow-up mail sent to him did not elicit a response.
The eight other independent telecom tower operators include Quippo Telecom Infrastructure Ltd, GTL Infrastructure Ltd and Essar Telecom Infrastructure Pvt. Ltd. There are also larger captive tower businesses owned by the likes of Bharti Airtel Ltd and Reliance Communications Ltd, India’s two biggest mobile phone companies. Quippo Telecom Infrastructure recently merged its tower business with that of Tata Teleservices Ltd.
“The tower companies have entered into a phase of consolidation where businesses that don’t have a business case to survive are being forced to merge or sell out in order to ensure that they survive,” said Girish Trivedi, deputy director of information, communication and technology practice, South Asia and Middle East, at research firm Frost and Sullivan.
One of the four persons familiar with the development at IMIL said the firm had followed a flawed business model and put up towers, hoping that once erected, they would automatically attract mobile operators to lease them. “They are looking at exiting the business and they have started work to sell off the infrastructure assets. They will most probably sell off in parts because in many areas other tower operators have infrastructure and therefore would not be interested in buying those towers,” said another person.
Calls to nine of IMIL’s 10 circle offices, on numbers listed on its website, revealed that these numbers either did not exist or had been temporarily disconnected. The Chennai circle, the only one with a still functional telephone number, directed Mint to the firm’s Gurgaon-based company secretary, who couldn’t be reached by phone.
An email sent to the media contact address given on IMIL’s website bounced back with the message that “the email account that you tried to reach is disabled”.
IMIL was one of the first independent tower businesses to be conceived and set up in India. Another, Xcel Telecom Pvt. Ltd, incubated and owned by Texas-based multi-strategy hedge fund Q Investments Lp., was recently sold to American Tower Corporation (ATC), which operates and owns 23,700 communications sites across US, Brazil, Mexico and now India.
It takes Rs25-28 lakh to set up an individual tower, said an investor in the business who didn’t wish to be identified. According to figures independently compiled by Mint, Q India sold its 1,700 towers at Rs47 lakh apiece. This, however, is much less than the value per tower of as much as Rs1.6 crore that Bharti Infratel Ltd and Reliance Infratel Ltd got when they divested minority stakes to private equity investors in 2007.
Bharti Infratel and Reliance Infratel are the tower business units of Bharti Airtel and Reliance Communications.
Shauvik Ghosh in New Delhi contributed to this story.