Cellco and tower operator Viom Networks is in early talks with banks about a potential merger with rival GTL Infrastructure, according to the Times of India.
A deal between the two companies would create India’s second largest towerco, after Indus…
Cellco and tower operator Viom Networks is in early talks with banks about a potential merger with rival GTL Infrastructure, according to the Times of India.
A deal between the two companies would create India’s second largest towerco, after Indus Towers, with about 70,000 towers.
But sources quoted by the newspaper said that the transaction is unlikely to go through because of potential valuation differences and GTL’s US$2bn debt load.
A few days ago, GTL and its unit GTL Infrastructure appointed SBI Capital Markets to help review their operations, including their financial performance and obligations.
Before that, their shares had fallen sharply after it was suggested that a stake in GTL and GTL Infra may be sold.
In recent months, GTL has been working to consolidate the Indian tower market, buying Aircel’s towers and attempting a US$11bn merger with Reliance Infratel’s towers business. The deal fell through on valuation issues.
More recently, in early February, it was reported that both GTL Infrastructure and Viom Networks had submitted bids to acquire 7000 towers owned by JV Vodafone Essar. Sources close to the deal confirmed to TelecomFinance at the time that GTL was interested in the towers and that it had hired Standard Chartered Bank to advise it on a potential deal.
However, valuation issues between British telco Vodafone and Indian conglomerate Essar Group with regards to their JV have delayed the tower sale process.
Meanwhile, Viom, which is the tower JV between operator Tata Tele and independent towerco Quippo, has also met valuation issues recently. In late June, the company reportedly said it was no longer looking to acquire Reliance Infratel, the tower unit of local mobile operator RCom.
Viom executive Sunil Kanoria was quoted saying that the company decided to withdraw from the process following valuation differences, branding Reliance Infratel’s asking price of US$5bn as unrealistic.
Before that, in mid-June, Viom had postponed plans to list on the Bombay Stock Exchange, according to sources cited by the Economic Times. Executives were quoted saying that the time may not be right for a listing given the current state of the equity market as well as the controversy surrounding the Indian telecom sector amid the 2G scam.
Viom declined to comment on speculation while GTL was not available before the press deadline.
