The deal, described as a “distress sale”, values Bharti Infratel at a little over $10 billion (Rs 47,000 crore). The troubled US lender purchased an undisclosed minority stake in Bharti Infratel in 2007 through a unit called the Special Situations Group, a proprietary investment arm that specialised in investing in high-yield debt and distressed assets. The division is now being closed.
Representatives for Citibank, JPMorgan and Bharti declined to comment. Sanjay Chawla, senior vice-president and telecom analyst at Mumbai-based Anand Rathi Securities, said valuations of tower companies have come off over the past two years and “any seller who has been able to exit without a loss in the value of their holding has made a good deal”.
A banker close to the transaction said the deal valued Bharti Infratel’s tower assets at a 15-20% premium over the valuation at which recent tower deals have been concluded.
In March this year, Nasdaq-listed American Tower Corporation (ATC) announced a deal to buy Xcel Telecom, founded by former BPL Mobile CEO Sandip Basu. ATC is estimated to have paid nearly Rs 800 crore to acquire Xcel’s portfolio of 1,700 towers, valuing each tower at a little over Rs 45 lakh. GTL Infrastructure’s imminent purchase of Aircel’s towers values each tower at Rs 48.5 lakh.
A Bharti executive said the tower arm had been able to maintain high valuations, attributing it to higher tenancy ratios compared to rival firms. India’s largest phone firm set up Bharti Infratel in November 2006 as a provider of telecom towers and related infrastructure. At the end of March last year, Bharti Intratel had over 53,000 towers in 23 telecom circles.
It sold a 9% stake for around $1 billion to a consortium of financial investors led by Singapore’s Temasek Holdings in 2007, valuing the company at $10-12 billion.
None of the other investors in the company are looking to exit now, it is learnt. Bharti Infratel has announced a plan to launch an initial public offering, but has not set a date yet.
It also owns a 42% stake in Indus Towers Limited, billed as the world’s largest tower company with over 100,000 towers. Vodafone Essar and Aditya Birla Telecom are the other shareholders in Indus Towers.