Mumbai: Idea Cellular Ltd is looking to sell its telecom tower interests even as it explores a merger with rival Vodafone India Ltd in an all-stock deal, according to two people familiar with the company’s discussions with potential buyers.
Idea Cellular has initiated talks with Bharti Infratel Ltd and American Tower Corp. (ATC) to sell its tower assets in two separate deals, said the people, both of whom spoke on condition of anonymity.
“Idea Cellular is in talks with Bharti Infratel to sell its entire 16% holding in Indus Towers, which is a three-way joint venture between Idea Cellular (through its unit Aditya Birla Telecom Ltd), Bharti Infratel Ltd and Vodafone India,” said one of the two people.
Bharti Enterprises is in talks to sell a minority stake in Bharti Infratel, chairman Sunil Mittal, said in an interview with Bloomberg in January.
The new investor in Bharti Infratel could be offered Idea’s stake in Indus, added the first of the two people cited earlier.
Bharti Infratel and Vodafone India own 42% each in Indus Towers. The company reported a revenue of around Rs15,374 crore in 2014-15. Aditya Birla Telecom’s proportionate share in the revenue was approximately Rs2,400 crore.
Vodafone’s stake in Indus is not part of the merger talks between Vodafone Group Plc and Idea.
In a separate development, American Tower Corp. has emerged as the front-runner to buy the tower assets of Idea Cellular Infrastructure Services ( ICIS), a subsidiary of Idea Cellular, which operates 11,000 towers, the two people added.
The Economic Times was the first to report the development on 31 January and pegged the deal value at Rs4,300-4,500 crore.
In 2014-15, ICIS reported total income of Rs238 crore, according to filings with the Registrar of Companies.
The potential exit from the tower business marks a deviation from the Aditya Birla group’s earlier plans to consolidate all its tower assets—including its stake in Indus Towers—into a single holding company and then sell off a minority stake in the newly formed entity.
An Idea Cellular spokesperson declined to comment on the story. A senior company official who refused to be named said that plans to create a merged entity are currently on hold.
An ATC India spokesperson also declined to comment. A Bharti Infratel spokesperson didn’t immediately respond to an email seeking comment.
An analyst said the deal makes commercial sense.
Exiting the tower business would help Idea reduce debt before the proposed merger and boost its valuation, said Mahesh Uppal, founder of consultancy ComFirst. “Telecom operators are increasingly realizing that running tower companies brings neither efficiency nor brand value,” he added.