Tata Teleservices Maharashtra Ltd (TTML) stock was up 4.67% on Thursday to Rs 24.65 on the Bombay Stock Exchange (BSE) after the company announced late on Wednesday that it was hiving off its tower arm at an enterprise value of Rs 1,318 crore. The TTML board approved the sale of 21st Century Infra Tele, a wholly owned subsidiary of TTML, to Wireless-TT Info Services Ltd (WTTIL), also known as Tata-Quippo. ?This transaction allows us to focus on our core business priorities of strengthening our market leadership in the voice and data segments. The cash inflow from this transaction, in excess of Rs 900 crore, will support our ambitious investment and growth plans,? said Mukund Govind Rajan, managing director, TTML.
As part of this deal, 21st Century?s entire portfolio of 2,535 towers in Mumbai, Maharashtra and Goa circles will be acquired by WTTIL at an enterprise value of Rs 1,318 crore, valuing each tower at Rs 52 lakh. A senior company official told FE that the money could be partly utilised to buy licences for 3G services and for the payment of TTMLs short-term loans.
TTML has a net debt of Rs 3,400 crore with 1.4 as the debt to equity ratio. WTTIL was formed via a merger of the telecom tower operations of Tata Teleservices (TTSL) (in which Japan?s NTT DoCoMo holds 26% stake) and Srei Infrastructure-owned Quippo in January 2009. TTSL holds 51% in WTTIL, while the remaining stake is held by Quippo Telecom Infrastructure Ltd (QTIL). After this deal, WTTIL will have over 38,000 towers. In January 2009, the combined entity had about 18,000 towers.
The transaction will provide a strategic advantage to WTTIL as it will complement the tower portfolio of the company in Mumbai, Maharashtra and Goa, where it does not have a significant presence currently. TTML?s tower portfolio, with a high tenancy ratio of 2.15, will further strengthen WTTIL?s current tenancy ratio which is in excess of 2. ?Post this acquisition, we will have an overall portfolio of over 38,000 towers by the end of March 2010 and the highest tenancy ratio of over two, in the industry,? said Arun Kapur, CEO, Quippo-WTTIL.
In January this year, Aircel sold its tower arm to GTL in an all cash deal worth Rs 8,400 crore to purchase its 17,500 towers. Comparing the Aircel-GTL deal with this one, analysts feel that it is an ?expensive? buy for WTTIL, as the Aircel towers were valued at Rs 48 lakh per tower. Also last month, Transcend Infrastructure, a subsidiary of American Tower Corporation, acquired Essar Telecom Infra in an all cash deal, at an enterprise value of approximately Rs 2,000 crore with a per tower valuation of Rs 45 lakh.