Tata Tele to merge with Quippo

New Delhi: Tata Teleservices announced its decision to merge its mobile tower company Wireless Tata Tele Info Services (WTTIL) with Quippo, a tower firm owned by the SREI Group and Singapore Government.

Post merger, Quippo will have 49 per cent stake in WTTIL while Tata Teleservices will hold the balance.

Under the terms of the deal, Quippo Telecom will pay Rs 2,400 crore ($ 493 million) to Tata Teleservices and also transfer its existing telecom infrastructure comprising 5,000 towers to WTTIL.

Once the merger is completed, the company will have 18,000 towers with an enterprise valuation of $2.6 billion (about Rs 13,000 crore). The merged entity will be managed by Quippo despite being a minority shareholder.

Mr Arun Kapur, Managing Director of Quippo Telecom Infrastructure Ltd, said, “This tower company will organically grow into an entity with over 50,000 towers by year 2012. We are confident it will hold the largest tenancy ratio in the Indian telecom space as well.”

Mobile subscriber base is expected to touch 500 million by 2010 for which at least 3.8 lakh more towers are required. In a bid to tap this opportunity, telecom players have demerged their infrastructure into separate tower business to unlock the value by selling minority stake.

Bharti Infratel, with ownership of 60,000 towers, had sold about 10 per cent stake to a consortium of investors for about $ 1 billion. Prior to this, Reliance Communications had sold 5 per cent stake in its tower company for $337 million. Quippo had also bought out 1,000 towers owned by the Spice Group.

“Indian tower companies are seen to have huge growth potential riding on low current population coverage coupled with high sharing potential as new operators roll out their services,” said an analyst.

Tata Teleservices had received interest from as many as 15 companies when it had announced its intention of selling equity in the tower company.

Explaining the rationale for partnering Quippo, Mr Anil Sardana, Managing Director of Tata Teleservices, said, “This partnership makes for perfect fit—Quippo is one of the most professionally-managed companies in this space.

Furthermore, this alliance will allow Tata Tele to concentrate on its core area of expertise. The deal is of strategic importance and value enhancing for all stakeholders particularly so since it combines the proven expertise of management and operational capabilities of QTIL with the committed support of TTSL.”