IPOs, asset sales, loans…For several months now, telecom tower companies have been considering various options to raise much needed financing aimed at cutting or repaying existing debt. “Aggressively contested 3G and BWA spectrum auctions in 2010 left…
IPOs, asset sales, loans…For several months now, telecom tower companies have been considering various options to raise much needed financing aimed at cutting or repaying existing debt. “Aggressively contested 3G and BWA spectrum auctions in 2010 left winners with increased amounts of debt on their balance sheet,” said Nitin Soni, an analyst at Fitch Ratings.
While a tower company has yet to complete an IPO so far this year, market volatility is expected to drive tower sales, especially given GTL and American Tower’s appetite.
Despite a decline in valuations, with a tower valued at about US$110,000, against US$150,000 a few months ago, experts in the industry believe deals will still take place.
Consolidators GTL and Viom are reportedly to looking to raise financing for their expansion plans.
As such, the market is home to both buyers and sellers.
Debt Financing
GTL Infrastructure is looking to raise about US$200m- US$300m from institutional investors to fund expansion plans and repay existing debts, a company official was quoted saying.
The company has reportedly hired Goldman Sachs, Enam Securities, Standard Chartered and Jefferies to manage the transaction.
In early February, it was reported that GTL and Viom had submitted bids to acquire 7000 towers owned by JV Vodafone Essar. Sources close to the deal confirmed to TelecomFinance that GTL was interested in the towers, and that it had hired Standard Chartered Bank to advise it on a potential deal.
At the time, Vodafone and conglomerate Essar’s disagreements over valuation put the deal on hold, but Vodafone has now bought out Essar, meaning it could get back on track.
GTL, which last year bought Aircel and nearly merged with Reliance Infratel, owns about 32,500 towers.
IPO
Viom Networks is now reportedly looking to raise Rs45bn (US$1bn) rather than the initial Rs50-60bn (US$1.5bn) it was seeking from an upcoming IPO.
The transaction will take place between April and September.
Last year, the company hired five banks – Citigroup, Credit Suisse, Goldman Sachs, IDFC Capital and Morgan Stanley – to arrange the share sale. It is expected to comprise a fresh issue of shares by Viom and the sale of shares by existing private equity firms Macquarie SBI Infrastructure Fund (MSIF), IDFC Private Equity, GIC-Singapore and Oman Investment Fund.
The company, which has approximately 35,000 towers with 80,000 tenants, plans to set up another 25,000 towers in the next two years, it added.
In March, it was reported that Viom would raise Rs15bn (US$330m) in debt finance over the next ten years through a mix of domestic and overseas borrowings for its capex.
TelecomFinance understands that the facility is managed by Deutsche Bank and ING.
It also includes German development agency DEG, and two Indian banks: Bank of India and Bank of Baroda.
The interest rate on the external commercial borrowing and rupee finance would be 350bp over Libor. Viom needs just under Rs20bn (US$440m) – with 80% of this to be made up of debt – to carry out its acquisition plans, a source reportedly said at the time.
Cellco Bharti Airtel is not looking to list its telecom tower unit, Bharti Infratel, in the immediate future, Akhil Gupta, deputy group CEO and managing director of Bharti Enterprises, was quoted saying.
He reportedly added that Indus Towers, a JV between Infratel (42%), Vodafone Essar, and Idea Cellular, would not be listed soon either. Indus is the leading tower company with about 100,000 towers.
Back in November, Bharti CFO Manik Jhangiani told investors that it was considering listing Infratel but emphasised that there were no definite plans.
Tower sale
State-owned telco Bharat Sanchar Nigam (BSNL) is looking to start discussions with potential investors about its telecom tower business, according to local reports.
The company, which owns about 45,000 towers in India, has reportedly received some suggestions from Viom Networks about its options.
Arun Kapur, Viom’s CEO, was quoted saying that BSNL could either sell its towers or share them with other operators. Both GTL and American Tower might reportedly be interested in buying these towers.
In the event that BSNL decides to keep the towers, Viom has suggested that it could manage tower-sharing arrangements on BSNL’s behalf, wrote reports.
Cellco Idea Cellular is reportedly considering selling 7,500 towers that are not part of its tower JV with Bharti Infratel and Vodafone Essar, known as Indus Towers.
Himanshu Kapania, deputy managing director at Idea, was quoted saying that such a deal could help unlock some value – reportedly as much as US$1bn.
Banking sources were quoted saying that Idea will only sell its towers to an investor with no strategic interest in towers.
Mobile operator Reliance Communications is struggling to sell 50,000 of the towers owned by its subsidiary Reliance Infratel, according to reports.
American Tower is reportedly not interested, since it is focusing on consolidating the towers it acquired from Essar Telecom Infrastructure last year for US$430m.
