GTL Infra, Viom eye Vodafone Essar towers

GTL Infra, Viom eye Vodafone Essar towers

Mumbai: GTL Infrastructure Ltd and Viom Networks Ltd have put in preliminary bids to buy Vodafone Essar Ltd’s 7,000 telecom towers, said two persons familiar with the development.

GTL Infrastructure, India’s largest independent wireless tower operator that bought Aircel Ltd’s 17,000 towers in January last year for 8,400 crore in an all-cash deal, has appointed Standard Chartered Bank as an adviser for the matter, the persons said on condition of anonymity.

Viom, formerly Quippo-WTTIL, is being advised by Barclays Capital, they added.

Vodafone Essar, India’s second largest mobile phone company by subscribers, has been looking to sell its towers in seven telecom areas that overlap with towers it co-owns in Indus Towers Ltd along with Bharti Airtel Ltd and Idea Cellular Ltd.

Vodafone Essar had sought a preliminary interest to discover a value for these 7,000 towers, the persons said.

Although a senior GTL Infrastructure executive, one of the two persons quoted above, said the company is interested in a deal, a company spokesperson declined to comment on the matter.

Viom director Sunil Kanoria also declined to comment.

“We don’t comment on any market speculation," Vodafone Essar said in an emailed response.

Vodafone Essar is looking at hiving off its tower business valued at around 3,500 crore, said the second person, who is an investment banker.

“GTL will raise money through a consortium of Indian and foreign banks to finance the deal," the banker said. “It will take some time for debt syndication but Standard Chartered will be the lead arranger."

To be sure, the deal, if it takes place, will be subject to verdicts on tax cases Vodafone Essar is fighting with the income-tax departments of the Gujarat and Delhi governments.

The departments have filed separate cases against Vodafone Essar’s plan to transfer tower assets from its regional subsidiaries into a separate company.

Three state high courts have approved the transfer of the towers in their states to the separate company. Mint could not immediately ascertain the names of the three states.

In January 2010, Aircel spun off its 17,500 towers into a special purpose vehicle, which was acquired by GTL Infrastructure. The deal made GTL Infrastructure the world’s largest independent tower company, replacing American Tower Corp.

The company also tried merging with Reliance Communications Ltd for its tower business last year. It pulled out of the deal on the last day—31 August—citing disagreement on deal valuation.

GTL Infrastructure also has approvals to set up 18,000 new towers; Aircel has the first right to use them as tenant.

Typically, around three wireless operators can share a tower, which is desired by tower firms to ensure business viability.

The deal could be a matter of scale for both the firms, said another investment banker, who is not involved in the initial talks.

“For GTL, this could mean adding around 25% of their existing portfolio, and for Viom, it will give them scale," he said on condition of anonymity. “Having Vodafone as the anchor tenant can be positive for the companies, and hence, it’s strategically important to both the companies."

GTL Infrastructure operates 32,000 towers across India with all major telecom service providers as clients.

Its share price closed 3.79% lower at 40.65 apiece on Friday on the Bombay Stock Exchange after it announced December quarter results on a day the benchmark Sensex index lost 1.54% to close at 18,395.97 points.

The company incurred a loss of 61.99 crore for the three months ended 31 December compared with a profit of 23.05 crore in the year-ago period.

Viom is an unlisted firm.

Aveek Datta contributed to this story.