Temasek-led group pays Bharti $1 bn for 9% stake in towers unit

Temasek-led group pays Bharti $1 bn for 9% stake in towers unit

New Delhi: Bharti Infratel Ltd, the telecom tower unit of Bharti Airtel Ltd, India’s biggest mobile firm by subscribers, sold almost 9% stake for $1 billion (Rs3,942 crore) to a consortium of financial investors, led by Singapore’s Temasek Holdings Pte Ltd.

Temasek invested $500 million, according to an email from a spokeswoman for the investment firm. Goldman Sachs Group Inc., The Investment Corp. of Dubai, Macquarie Group Ltd, Citigroup, AIF Capital, and India Equity Partners are the other investors.

The placement is the first step towards taking Bharti Infratel, which owns 20,000 telecom towers and 42% in a recently-formed towers joint venture, a listed company by 2010, a senior executive of the firm said. The deal values Bharti Infratel between $10 and $12.5 billion.

“We are determined to go public, however, whether more equity could be divested is something which the company board would decide," said Akhil Gupta, joint managing director of Bharti Airtel.

With the government tightening availability of radio spectrum that phone firms can use, India’s mobile phone companies have aggressive plans to add towers to ensure wider coverage and better quality of service. As they expand into rural areas, they are also looking to share infrastructure with others.

“With Infratel, we are focused on seven circles, which include states such as Madhya Pradesh, Haryana, Himachal Pradesh and North-Eastern areas," said Gupta. “As operators expand in these areas, we will have the infrastructure, which could be shared."

Earlier this month, Bharti Infratel, along with Idea Cellular Ltd and Vodafone Essar Ltd, formed a joint venture called Indus Towers Ltd with some 70,000 towers (30,000 were Bharti Infratel-owned) being shared by the operators in 16 Indian states. The Bharti firm and Vodafone Essar own 42% each with 16% held by Idea. All three offer GSM services.

On Wednesday, Spice Communications Ltd sold around 875 telecom towers for Rs600 crore to Quipo Telecom Infrastructure Ltd, an independent tower company.

In August, Reliance Communications Ltd, a firm running networks on the so-called CDMA standard, sold about 5% of its towers subsidiary, Reliance Telecom Infrastructure Ltd, to investors for $337.5 million, valuing its 13,000 towers at $7 billion.

Yogesh Kirve, an analyst at Anand Rathi Securities Ltd, said Reliance’s tower business attracted better valuation because more tenants can be occupied on a single CDMA tower.

“A CDMA tower can have almost 4-6 tenants, when compared to a GSM tower that can only accommodate 1-2 tenants," he said.

Shares of Bharti Airtel fell 2.65% to Rs940.70 on the Bombay Stock Exchange.