Siva In Talks To Pick Up Stake in Telco S Tel

NRI businessman C Sivasankaran may just be planning a re-entry into India's rapidly growing telecommunications market. Economic Times reports that Sivasankaran is in talks to buy the stake of one of the private equity promoters who hold a 51% stake in S Tel, a Chennai-basedcompany holding license in six states. Sivasankaran, known as Siva, sold his stake in Aircel for $1.08 billion to Maxis Telecom in 2005. Earlier this year, S Tel sold a 49% stake to Gulf-based Bahrain Telecommunications Co and Millennium Private Equity for $225 million. S Tel has licenses to operate in 6 Indian states - Bihar, Orissa, Jammu & Kashmir, Himachal Pradesh, North East and Assam. The company can also provide broadband services across the country as it has a Category A ISP license. S Tel is promoted by Skycity Foundations and Mauritius-based Telecom Investments. The real identity of the investors of S Tel is not known. The directors of the company, as mentioned on the company website, are S Natarajan, Santhosh Robert and Padmavathy Suresh. Siva's re-entry come on the backdrop of the term of his non-compete agreement, which he had signed Maxis Telecom, ending in March this year. He was also barred from buying more than a 10% stake in an Indian telecom firm. In the meantime Siva bought a 8.6% stake in Tata Teleservices Rs 1,200 crore in 2006, which fell to to 6% after Japan's NTT DoCoMo bought 26% stake earlier this year. He is also said to have invested Rs 350-400 crore in Unitech Wireless. Siva has made fortunes buying, turning around and then selling Indian companies. His investment firm is known as Siva Ventures. Besides Aircel, he sold coffee chain Barista, which he bought over for Rs 65 crore (~$15 million) to Italian chain Lavazza for $125 million. Another one of his investments was Tamilnad Mercantile Bank.

Source: Economic Times

Axious Investment to Pick 3.8% stake in QTIL

Singapore-based Axious Investment is picking up 3.8% stake in standalone tower company Quippo Telecom Infrastructure (QTIL). The deal size is estimated at around Rs 200 crore. According to sources, Axious will buy out Delhi-based Premier Chemco’s 3.8% stake in QTIL, and this will involve a transaction between two private parties.

Source: Economic Times

Bharti, Alcatel in $500 mn deal for network mgt

Telecom major Bharti Airtel today signed a five-year managed services deal valued at $500 million with Alcatel Lucent for its fixed-line and broadband operations. The services would be managed by a joint venture in which Alcatel Lucent would hold 74 per cent, while the remaining 26 per cent would be held by Airtel, Bharti Airtel Chief Executive Officer Manoj Kohli said.
The JV would be run by Alcatel Lucent with 4,000 employees, some of whom would come from the network management firm. "The JV will manage Airtel's fixedline and broadband services," Kohli said. Bharti has already outsourced its network management to Nokia Siemens and Ericsson in two different deals for its wireless business while its IT infrastructure is managed by IBM.

Source: Business Standard

Panel backs M&A in telecom

A committee set up to resolve the controversy over allocation of airwaves or spectrum to telecom operators asked the government to modify its policies to allow consolidation in the industry, while opposing a three-year stock sale ban on promoters of companies that acquired telecom licences last year. The communications ministry and telecom regulator Trai had proposed the lock-in period to keep out non-serious players eyeing quick profits. The committee said, instead of imposing a ban on sale, the government should modify existing policies to allow larger operators to buy new entrants to fulfil their spectrum requirements. While suggesting several changes in India’s telecom M&A norms to allow consolidation, the committee criticised the current policy for leading to fragmentation of the sector by allowing about 15 players per circle. All telcos should be allowed to buy and sell spectrum and pay a fee to the government, the panel said, adding that the country should adopt the internationally-accepted auction system for issuing additional airwaves to telcos. ET had reported on April 24 that the committee would recommend auctions for all future spectrum allocations. The committee comprises representatives of the government, telecom regulator Trai, telecom technology experts and industry executives. The committee admitted that some players who received spectrum at a fixed fee may sell it or merge with another company making huge profits without rolling out a network. “Such gains can be moderated by levying a spectrum transfer or merger charge on all such transactions. Allowing such moderated gains is a small price to pay for moving to a market-based mechanism for spectrum allotment,” it said in its draft report, which was submitted to the department of telecom on Friday. The market should be allowed to determine the optimum number of operators by facilitating spectrum transfer and merger, the report said. Currently, India follows a controversial practice of allocating spectrum based on companies’ subscriber base, and is the only country in the world that follows this method. The report said that only the start-up spectrum, which is the minimum amount of radio frequencies that is required to launch mobile services, should be given for free for existing telcos. All subsequent allocations should be only through auctions, it said. The committee has recommended a flat fee for radio frequencies allocated to telcos since January 17, last year, the date on which the committee was set up. But, this one-time fee will be determined by the upcoming 3G auctions. For instance, if Vodafone Essar has been awarded 2 units of radio frequencies in Delhi & Mumbai after January 08, it will have to pay a fee equivalent to what the same amount of airwaves fetched during the 3G auctions. As per the current policy, all telcos share 2-6% of their annual revenues with the government as a fee for using the radio frequencies allotted to them. The committee said this fee should be a flat 3% irrespective of the quantity of radio frequencies that is held by a telecom company. The committee also refused to endorse demands from certain sections of the industry that all existing operators pay a one-time fee for the excess spectrum they hold in order to ensure a level-playing field with new entrants which only have start-up spectrum. The committee felt that that the government need not worry about ensuring an absolute level-playing field between licensees who entered the market at different points in time. “Variable pricing of resources for entrants at different times happens with natural resources like land for industrial development as well. Early or late entry comes with a set of advantages and disadvantages,” the report said. The committee said auctions can be held at regular intervals where telcos get airwaves in blocks of 1 MHz each. It also said that the current cap where GSM operators can hold a maximum of 15 MHz and CDMA players 7.5 MHz be done away with. Instead, it proposed an alternate methodology where a telco can take part in auctions as long as it does not hold more than 25% of the total spectrum available in that state or circle. This implies, the cap will be different for each circle as the availability of radio frequencies varies from state to state. Companies that enter the industry in the future the license will not come bundled with start-up spectrum, and these companies ‘would have to go to the market even for their initial airwaves, recommended the committee.

Source: Economic Times

BSNL partners Nokia for 3G services

BSNL, India's third largest mobile company in terms of subscribers, has tied up with Finnish cellphone major Nokia for bundling 3G handsets along with its services. A senior BSNL official told PTI that the PSU has tied up with Nokia to supply handsets for its 3G subscribers. Nokia India Head, Operator Channels, V Ramnath said "Nokia India has partnered BSNL in bringing to Indian consumers 3G services on a host of Nokia devices." Nokia 3120Classic, Nokia 5320, Nokia N79, Nokia N81, Nokia E71 and the Nokia 5800Xpress Music will be offering BSNL 3G services. Owners of these devices will be able to avail of talktime as well as data packages across various price plans, he said. "We are also in discussions with BSNL to offer its subscribers a combination of free as well as paid for applications in order to further enhance consumer experience, Ramnath said. Chalking out an aggressive strategy to garner more 3G mobile subscribers, BSNL has also tied up with consulting arm of Swedish telecom equipment vendor Ericsson as part of its 'Go To Market' strategy. It will perform network improvement and optimisation services for the core, radio and transmission networks installed by its parent Ericsson," a senior official of the PSU had told media. BSNL is not positioning 3G service for the mass market, he said. The official, who did not wish to be named, said the PSU has reported 8,000-10,000 subscribers since its launch few months ago. However, industry sources disputed this figure saying the company may have garnered not more than 2,000 customers over 24 cities. Private players are yet to start the 3G service as they would get the required spectrum through auction, which is yet to take place. Till they launch the service, BSNL is trying to leverage its first mover advantage. BSNL launched 3G mobile services in February. The 3G services enables video streaming applications such as Live TV, movie downloads, high speed data download on mobile phones. Callers can also see each other on their mobile phone screens.

Source: Economic Times

Inbound merger and acquisitions set to increase: Assocham

Strong financials of domestic companies and robust demand in sectors like telecom, pharma and capital goods will kickstart inbound merger and acquisition (M&A) activities in India in the next six to nine months, an industry lobby report said Thursday. The report by the Associated Chambers of Commerce and Industry (Assocham) said: 'Inbound M&As, which had witnessed a steep fall of 85 percent due to the global financial crisis, and consolidation deals are expected to show signs of revival by October-December period 2009.' Assocham president Sajjan Jindal said in the report: 'Indian companies could attract greater number of inbound M&A deals as the equity valuations of certain sectors like telecom, pharma, and capital goods offer lucrative strategic option to bigger foreign companies.' In January-March 2009, the inbound M&A deals, which had the maximum share in total M&A deal size during October-December 2008, contracted by a whopping 85.28 percent. The outbound M&A deals shrunk 48.62 percent as the number of deals declined from 28 in October-December 2008 to 16 in January-March 2009, the report said. The aggregate M&A deals size plunged more than 70 percent in the first quarter of 2009. The number of deals also declined from 58 to 45 during the period. The Study also found that if it was the telecom sector that attracted the maximum share in the M&A deals in the last quarter of 2008, the pharmaceutical and IT sectors dominated the corporate M&A activities in the first three months of 2009.

Source: Reuters

Wipro Buys Nokia Mobile TV Technology Unit

The world's top cellphone maker Nokia has sold its enterprise mobile TV unit to India's Wipro, a spokesman for Nokia said on Monday.
The Mobile Broadcast Solutions unit had about 40 employees and created software and hardware which enabled the mobile TV technology on the phone to find and access the broadcasting network.
"We wanted to focus on the consumer side of things, the mobile TV client in the devices, rather than on the business-to-business side," said the spokesman.
Mobile television broadcasting, the hottest upcoming feature for cellphones only a few years ago, has found little demand anywhere in the world.

IFC Invests In Lifetree Convergence; To Fund Inorganic Growth

Lifetree Convergence Ltd., a Delhi based telecom software and billing solutions company, has raised growth funding from International Finance Corporation (IFC), the private equity arm of World Bank. Even though the amount is undisclosed, a 2007 project report of IFC showed that the PE entity was invited to invest upto $20 million of a total funding requirement of $60 million.
Avendus Capital was the exclusive financial advisor to Lifetree for the transaction. According to a statement from Avendus, the capital would be used by Lifetree for inorganic initiatives. The transaction was consummated in August 2008.
Interestingly, Lifetree was acquired by Finnish telecom company Tecnomen for a cash and stock consideration of €33.2 million. Lifetree Convergence was founded in 2000 by Atul Chopra and others. It provides convergent billing and customer care, rating, and messaging platforms for the telecom industry.
The operational support systems (OSS) and business support systems (BSS) software space, in which Lifetree is present, is a $29 billion opportunity, and is expected to grow at 8% year on year. Among them, the convergent solutions are expected to grow by 30% a year. Emerging markets are expected to contribute over 50% of the projected growth in this domain, a statement said.

Essar group likely to dilute stake in Kenya venture

Diversified business conglomerate Essar group is likely to dilute its stake in Econet , its telecom venture in Kenya, to finance expansion in the country. According to sources, Essar is looking at inducting a private equity firm as a strategic partner. The proceeds of the stake sale would be used by the company to expand its networks in Kenya. When contacted, the Essar spokesperson declined to comment on the issue. Essar Communications Holdings (ECHL), the telecom subsidiary of the Essar Global, owns 49 per cent of Econet Wireless International, which in turn holds 70 per cent of Econet Wireless Kenya. Earlier, South African telecom major MTN Group had reported to have shown interest to acquire stake in mobile phone service provider Econet Wireless Kenya, in which Indian entity Essar Communications Holdings has management rights.
However, the company had denied reports of MTN planning to buy Econet.
Econet Wireless International is a diversified telecommunications group with operations in nine countries in Africa, Europe and the East Asia Pacific, offering products and services in mobile and fixed telephony services, the internet and satellite.

Essar phone arm goes shopping with $75 mn

The Essar group’s mobile retail arm, The Mobile Store, plans to raise $75 million (approximately Rs 375 crore) to fund its acquisition plans, among other things, in India. Speaking to Business Standard, CEO Rajiv Agarwal said, “We are talking to various private equity players to raise funds for our expansion plans, which include acquisitions as well as setting up new stores in the country. Though we are not in final stages of talks with any player for acquisition, we will be looking at Indian companies.” As another sign of consolidation in the mobile retail space, BK Modi’s Spice Group fully acquired the Indian arm of Dubai-based mobile retail player, Cellucom. The deal, which happened last month, is through a share-swap involving Spice acquiring Cellucom’s India stake, while Cellucom invested to acquire 26 per cent in Spice’s mobile retail arm, HotSpot. Spice Corp will now invest Rs 100 crore in the retail arm. While Agarwal did not disclose the stake that would be diluted through Mobile’s proposed expansion, he said the investments would be completed within three months. “It is too premature for us to comment on the stake that we will sell. However, it will definitely be only a minority stake. We are in talks with both foreign and Indian private equity firms.” Agarwal said the company planned to raise the number of mobile retail outlets to 1,800 by 2010 and to take it to 2,500 by the next two years. “India is a very large market and the mobile retail market has a large potential given the number of subscribers that are being added in the country every month. We have only about 6 per cent of the total mobile retail market, so we do have scope to expand,” he said. Analysts say $75 million is a huge amount and the company has good opportunity to acquire a company with this much money. “For Essar, making a strategic buy in some regional mobile retailing chain will be a good option to increase its presence in the local regions as mobile retailing has very few national players,” said Purnendu Kumar, associate vice-president, Technopak.
“All mobile retailers are doing well even during the recession because, due to economies of scale, they are able to offer aggressive pricing,” Kumar added. The company is also planning to launch phones under its private label during the year. At present, The Mobile Store has around 1,400 outlets which, apart from mobile phones, sell accessories, mobile connections and recharges and provide services like bill payments and mobile repairs.

American Tower Corp In Talks With Gurgaon Tower Minnow

American Tower Corporation (ATC), one of the world's largest standalone telecom tower firm, is in talks to acquire Gurgaon-based Independent Mobile Infrastructure Ltd (IMIL). This development comes just two weeks after ATC's acquisition of Xcel Telecom for around Rs 800 crore. IMIL has a presence in 10 circles with around 400 towers, of which only 125 have tenants, reports Economic Times. Since the occupancy is low, the company is expected to get a valuation of Rs 120 crore at the upper end, the report added. IMIL was founded by Jide J Zeitlin, a former partner at Goldman Sachs, in 2006 and is promoted by his private equity firm Keffi Group. The firm is now reportedly closing down most of its India operations.
The telecom infrastructure is rapidly consolidating with independent players looking to expand quickly to grab business from new telecom operators. Now, three main independent tower operators - GTL Infrastructure, Tata-Quippo combine and American Tower Corporation - are competing among themselves and with captive operators for the market. Captive players like Indus Towers (a JV of Bharti, Vodafone and Idea), Reliance Telecom Infrastructure and Bharti Infratel currently dominate the market. ATC has around 2,000 tower sites in 15 telecom circles after its acquisition of Xcel Telecom. Biggest independent player in the country is Tata-Quippo with aroound 18,000 towers. It's also said to be in talks for a merger with Essar Telecom Infrastructure, an independent firm with 4,500 towers. GTL Infrastructure Ltd is another player with around 7,000-8,000 towers. Also valuation of telecom towers have been dipping. Bharti Infratel Ltd and Reliance Infratel Ltd valued towers at around Rs 1.6 crore when they divested stake in 2007. In the Tata-Quippo merger towers were valued at Rs 78 lakh, while in the more recent ATC's acquisition of Xcel Telecom valued them at Rs 47 lakh.

DoCoMo to buy 12% in TTML for Rs570 crores

Tata Sons Ltd today said that DoCoMo would acquire 12 per cent of the common shares of Tata Teleservices (Maharashtra) Ltd (TTML) for about Rs 570 crore through an open offer.
“DoCoMo is preparing to acquire roughly 12 per cent of the common shares of Tata Teleservices (Maharashtra) Ltd (TTML) for about Rs 570 crore through an open offer, as the tender offer period ended on March 12,” a statement by the company said. The statement added Tata Sons has completed the sale of a 26 per cent stake in the group’s unlisted mobile telecom firm, Tata Teleservices Ltd, to DoCoMo. The two firms had announced the $ 2.7 billion deal in November last year. DoCoMo will nominate three executives to serve on TTSL’s board of directors, Tata Sons said in a statement. With this, DoCoMo is now a 26 per cent shareholder in TTSL, where Tata Sons is the single largest shareholder, with over 40 per cent stake in the company. NRI businessman C Sivasankaran holds 8 per cent and the Singapore government’s investment arm holds 9.9 per cent. The Japanese company said the acquisition in TTSL included 20 per cent newly issued shares and 6 per cent shares purchased from shareholders. Yesterday, Tata Communications sold one per cent of its stake in TTSL to DoCoMo for Rs 424 crore and another Tata firm, Tata Power, is also learnt to have sold some of its stake to DoCoMo for Rs 317 crore.

Zain exploring India telecoms acquisition

Kuwait-based mobile group still open to possible investments in Datacom or Loop Telecom.
Kuwait's Mobile Telecommunications Co., or Zain Group, said it is looking for an acquisition in India to enter the fastest growing telecommunications market in the world."Whilst in 2008 Zain engaged in discussions with leading investment banks on (acquisition) opportunities in India, we were unable to conclude any transaction," it said in an emailed statement to Dow Jones Newswires late Tuesday."Zain will continue its evaluation of opportunities."The company is still considering investments in Datacom Solutions Pvt. Ltd. or Loop Telecom Pvt. Ltd., two companies it had looked at last year as well, Zain said.

The two privately owned companies hold licenses to start mobile phone services across India.Zain said it can't provide further details on its India plans "at this stage."Global telecom companies are vying to enter India - which adds more than 9.0 million mobile phone users every month - to offset slowing growth in developed markets.The country had 376.12 million mobile phone users at the end of January, the telecom regulator's data showed.Datacom is 64% owned by consumer goods maker Videocon Ltd., with the rest being held by a family-owned venture of Mahendra Nahata, the chairman of Himachal Futuristic Communications Ltd.While Videocon Chairman Venugopal Dhoot said he wasn't aware of any discussions with Zain, Loop officials declined to comment."If they do (buy a company in India), it will be only to extend their footprint," Marise Ananian, an Egypt-based telecom analyst at EFG Hermes, said.Zain's main strategy is to focus on the African and Middle Eastern markets, where it is facing stiff competition, Ananian said.Zain is also exploring acquisition opportunities in Africa, the Middle East and other parts of Asia as part of its efforts to become one of the top 10 global mobile operator by 2011, the statement said, without elaborating.

Pacnet Increased Stake In Indian Joint Venture To 74%

There is more investment coming into the telecom sector. Asian telecommunications service provider Pacnet said it has increased its stake to 74% from the current 55% in its Indian joint venture in India. The company plans to apply for national long distance (NLD) and international long distance (ILD) communications licenses.
Bill Barney, Chief Executive Officer of Pacnet, said: "Together with our joint venture partner FutureWorld India Pvt. Ltd., we have further capitalised Pacific Internet India Pvt. Ltd to support our network roll out in India post receipt of ILD and NLD licenses." The additional capital brought in by Pacnet is not known.
Pacnet recently received approval from the Foreign Investment Promotion Board of India to increase its shareholding in the joint venture and to apply for ILD and NLD licenses. It may obtain the Letter of Intent from the Department of Telecom of India soon.
Pacnet currently offers Internet services in six Indian cities including Bangalore, Chennai, Mumbai, Pune, Gurgaon and Hyderabad. The company is looking at Pan India coverage, besides offering its full suite of network services including International Private Line (IPL), IP VPN, Ethernet IPL, IP Transit, Direct Internet Access, as well as managed services.
Pacnet's managed services include its recently launched Media Delivery Service that enables enterprises to distribute digital media around the world without investing in a costly high-bandwidth infrastructure.
According to Barney, "India will remain one of the world's fastest growing markets."
India's demand for bandwidth is also forecast to grow and latest figures from research firm TeleGeography has forecast bandwidth demand in India to grow from 157,041 Mbps in 2009 to 1,344,141 Mbps in 2014.
"This supports our strategy to focus on India as one of our key countries to invest aggressively in 2009, as we will continue to tap the continued economic strength of India, and support the country's demand for added network connectivity," Barney added.

Vodafone Essar To Hive-off Telecom Infrastructure Arm

Telco Vodafone Essar has applied to FIPB to hive of its telecom infrastructure business into a new entity called Ortus Infratel and Holdings Pvt Ltd. The entity will hold Vodafone Essar’s 42% stake in Indus Towers, a joint venture between Bharti Airtel, Vodafone Essar and Idea Cellular, reports Economic Times. Apart from this, it will also hold the infrastructure owned by Vodafone Essar.
Indus Towers operates 90,000 towers in around 16 circles. Besides this, Vodafone Essar separately operates 6,000 towers in six circles where Indus is not present. Essar also operates its own independent mobile tower firm, Essar Telecom Infrastructure, which will not be included with Ortus. Essar Telecom Infra has around 4,500 towers and is currently in talks with Tata-Quippo combine.

Essar Group’s Ruias own 33% stake in Vodafone Essar, and shareholding of Ortus will also be along similar lines. Ortus also plans to invest Rs 500 crore, it said in its FIPB application.
The telecom infrastructure sector, in which private equity funds have invested billions of dollars is going through a process of consolidation. This seems to be aided by the falling valuation oftelecom towers. Towers were valued at Rs 78 lakh in Tata-Quippo merger, while in the more recent American Tower's acquisition of Xcel Telecom valued them at Rs 47 lakh.

Dhoots to buy Nahata's 36% in Datacom

A long-running tussle between the Dhoots of the Videocon Group and Mahendra Nahata of Himachal Futuristic Communications over their telecom joint venture Datacom is nearing an end, with Mr Nahata agreeing to sell his 36% stake to the Dhoots for around Rs 1,200-1,300 crore, two persons familiar with the negotiations told ET. A settlement will allow the Dhoot family, which owns the remaining 64% stake in the company, to bring in a strategic partner to bankroll the company’s pan-India rollout plans, said the two persons, asking not to be named, as they were not authorised to speak about it.

Datacom, which has licences to offer services in all telecom circles except Punjab, has engaged Morgan Stanley to find a strategic partner. The company was one of the nine firms to get telecom licences early last year. The deal will also involve HFCL Infotel’s telecom operations in Punjab being merged with Datacom. But Mr Nahata will not get any additional cash consideration for HFCL Infotel, as its over Rs 400-crore debt will be transferred on to the books of Datacom. The figure could not be independently verified by ET.

When contacted, Mr Nahata and Videocon chairman Venugopal Dhoot denied they had reached an agreement. “It’s status quo. There is no agreement and no negotiations between us. We will soon launch pan-India services. We have no knowledge of HFCL Infotel, nor did we have any discussion with anybody as regards that business. There is no new development,” Mr Dhoot said, in reply to a detailed query. Mr Nahata also said the “situation continues to be as it was” and added he was not exiting the company. However, one person familiar with the negotiations insisted a deal had been reached and would be announced soon.

The second person also confirmed that an announcement was imminent and the deal value would be pitched around $250-270 million. One of India’s top law firms is drafting the settlement between the two partners. The negotiations between Mr Nahata and the Dhoots have been deadlocked for a year now, with Mr Nahata demanding Rs 2,116 crore for his stake. Last year, he had rejected an offer by the Dhoots to buy him out for Rs 1,360 crore.

Russia's government may buy stake in Shyam Telelink

Russia's government is considering investing 680 million dollars (525 million euros) in an Indian telecoms firm to help out the majority Russian owner, a newspaper reported here today.

Russia has set aside 23.7 billion rubles "for acquiring shares in the joint venture Shyam Telelink," now known as Sistema Shyam TeleServices, in its draft budget for 2009, the 'Kommersant' daily said, citing a copy of the document.

A source close to the deal told the 'Kommersant' the funds would go to buying a 20 per cent stake in Sistema Shyam TeleServices, which has licences to provide mobile phone services in 22 Indian regions and has over 5,00,000 subscribers.

The Indian venture is already more than 73-per cent owned by Russia's Sistema group, which is controlled by billionaire Vladimir Yevtushenkov and also owns Russia's largest mobile phone operator, MTS.

Under the agreement being considered, Sistema would retain a majority stake in the Indian venture and Russia would buy the shares as part of a plan to settle New Delhi's outstanding Soviet-era debt to Moscow, the daily said.

The newspaper said Sistema would find it difficult to pursue its Indian expansion plans without extra support due to its hefty debt burden. Many big Russian companies have scaled back investment due to the global credit crunch.

Essar Tele Infra, Quippo likely to merge

Essar Telecom Infrastructure, the country’s second-largest independent telecom tower and infrastructure company, is in talks with the Tata-Quippo tower company for a possible merger, a person familiar with the discussions told ET. Both Quippo Telecom MD Arun Kapur and the Essar group spokesperson declined to comment on the matter. All standalone tower companies in India, except GTL, have less than 6,000 towers each and are exploring merger and buyouts options to take on the large players such as Indus Towers, Bharti Infratel and Reliance Infratel. Moreover, the standalone tower companies have been forced to cut back expansion plans as funding has dried up in the past few months.

American Tower Corp, a global major in the telecom infrastructure space, announced on Tuesday that it will acquire the Mumbai-based Xcel Telecom, which has about 1,700 towers, without disclosing financial details. Indus Towers, a joint venture between Bharti Airtel, Vodafone Essar and Idea Cellular in 16 circles, has about 90,000 towers. Bharti Infratel has just under 30,000 units and Reliance Infratel has about 47,000 towers.

Last year, Essar Telecom Infrastructure was on the ‘verge’ of merging with stand-alone tower company GTL Infrastructure, but the $2 billion deal fell though at the last minute. The two companies went to the extent of finalising the deal structure, which involved GTL Infrastructure buying Essar’s business and merging it with itself, before deciding against going ahead. “Since then, Essar has been looking to merge itself with another entity to bring scale into the business. This is exactly what led to the Tata-Quippo merger,” said an executive at a competing tower firm. In December 2008, Tata Teleservices hived off its tower arm, Wireless Tata Telecom Infrastructure (WTTI), and merged it with Srei group company Quippo Telecom Infrastructure (QTIL). QTIL made an upfront cash payment of Rs 2,400 crore and transferred its 5,000 towers to WTTI in exchange of a 49% stake and management control in the merged entity, which has over 18,000 towers with an enterprise valuation of about Rs 13,000 crore ($2.6 billion).

If the Tata-Quippo deal is taken as a benchmark, every telecom tower in the country should be valued at Rs 78 lakh. Essar Infrastructure has about 4,500 towers and with a conservative value of Rs 50 lakh per tower, its valuations will exceed Rs 2,000 crore. In 2007, Bharti Airtel and Reliance Communications attracted valuations of Rs 1.2-1.6 crore per tower while offloading stakes in their tower arms to buyout groups.

American Tower To Acquire Xcel Telecom

Wireless-tower operator American Tower Corporation is close to acquire independent telecom tower operator Xcel Telecom. The Mumbai based company was established in 2006 by former BPL Mobile chief executive Sandip Basu with $500 million in funding from Q Investments. Nasdaq-listed American Tower is acquiring three year old Xcel Telecom for Rs 700 crore, reports Economic Times.

The talks of the deal between the two companies have been going on for some time now. American Tower was in race to acquire a stake in Wireless Tata Telecom Infrastructure Ltd and was also reported to be in race for a stake in Reliance Infratel last month. But its CEO Jim Taiclet had said that the company was interested in operational control of tower assets and not minority stakes.

The telecom tower sector has been going through a process of consolidation. Earlier this year SREI Group-promoted Quipo Telecom Infrastructure Ltd (QTIL) merged with Tata Tele's tower arm with former picking up a 49% stake in latter for Rs 2,400 crore. The combined entity is operating as an independent tower so it can cater to the new entrants.

Xcel Telecom has about 1,000-1,200 towers in the country. With American Tower Corp paying Rs 700 crore, the deal values each tower between Rs 58-70 lakh. This is in range of Tata-Quippo deal, which valued each tower at Rs 61 lakh. Earlier deals involving Reliance Infratel and Bharti Infratel valued each tower between Rs 1.6- 2 crore.

Being an independent tower operator in India is an attractive proposition at this time. There are a number of new entrants coming into the markets which include Swan-Etisalat, Unitech-Telenor, S Tel-Batelco and Datacom. Telecom tower operators will also benefit from the launch of 3G services in India.

There are other independent operators like Gurgaon-based Independent Mobile Infrastructure and GTL Infrastructure.

MTNL to spin off realty, towers; stock up 8%

Indian state-run telecoms firm, Mahanagar Telephone Nigam Ltd (MTNL.BO) (MTE.N), plans to spin off its real estate and mobile towers into a separate arm, the Economic Times reported on Tuesday.

The property and towers are worth more than 60 billion rupees ($1.2 billion) and will help MTNL, which provides telecoms services in New Delhi and Mumbai, raise funds for its expansion by selling the assets or a possible listing, it said.

The newspaper quoted an unnamed MTNL official as saying a final decision would taken by the company's board.

MTNL Chairman R.S.P. Sinha did not offer any comment when contacted by Reuters. ($1=51.4 rupees) (Reporting by Devidutta Tripathy; Editing by Ranjit Gangadharan)