Indus Towers will hike mobile firms’ value

Indus Towers will hike mobile firms’ value

Mumbai: The formation of an independent tower company by the three largest private mobile service providers will help improve the valuation of their passive infrastructure individually, say analysts.

Bharti Infratel Ltd, a subsidiary of India’s largest mobile service provider, Vodafone Essar Ltd, and Idea Cellular Ltd on Saturday announced the formation of Indus Towers Ltd, an independent tower company which will provide passive infrastructure services. The new company will cater to all telecom operators and other wireless services providers such as broadcasters and broadband services providers.

“Earlier, the towers were factored in on an individual basis for these companies," said Sumit Modi, an analyst with Mumbai-based brokerage Emkay Share and Stock Brokers Ltd. “Jointly for these towers, the tenancy ratios will be higher, so will be the valuation," he added.

The new company will have 70,000 sites in 16 out of the 23 telecom circles in the country. Bharti Infratel has transferred 30,000 towers of 16 circles and it will operate in the remaining seven circles with approximately 20,000 sites.

Vodafone Essar Ltd has transferred 30,000 towers of the circles it operates in to this new company. Likewise, Idea Cellular has transferred 10,000 towers of the nine circles out of the 11 it operates in.

Bharti and Vodafone Essar will own 42% each and Idea will own the remaining 16% stake in Indus Towers.

“While these operators will continue to run their active infrastructure completely independently, they will be able to enjoy capital expenditure and operating expenditure savings, enhanced operational efficiency and quicker expansion of coverage," said the three companies in a joint statement issued on Saturday.

Another advantage the companies will enjoy will be to roll out their networks in the rural areas at less cost and in less time.

Reliance Communications Ltd, India’s second largest wireless service provider, divested 5% stake in its tower company to seven investors for Rs1,400 crore this year. The deal valued the company, which controls 13,000 towers, at Rs27,000 crore.