Tata Teleservices (Maharashtra) Ltd (TTML) is scouting for partners to hive off its tower arm and wholly-owned subsidiary, 21st Century Infra Tele Ltd which it had acquired last year. The company is looking to conduct a 49% stake sale by this financial year, provided it gets the right valuation. ?We have been looking for a stake sale since last year, but due to the economic crisis, could not finalise on the valuation. Our stakeholders have approved of the 49% stake sale,? said S Venkatesan, CFO, TTML. ?TTML’s towers are expected to be valued at Rs 50-70 lakh per tower. This would mean the company would rake in Rs 1,000-1400 crore from the 49% stake sale?, said a Mumbai based analyst. TTML shares on Thursday closed at Rs 35.45, down 0.7% on the Bombay Stock Exchange (BSE) on a day when the benchmark Sensex fell 382.59 points or 2.41%.
A merger of the tower business with Tata Teleservices’ tower business is also an option, he added. The company would primarily do this to raise money to reduce its debt levels and interest rates. As of June 30, 2009, TTML had a total debt of Rs 3,150 crore, 50% of which it will convert into long-term loans over a period of 4-5 years. This would buy TTML time to pay out the debt, as by then, its GSM business would also pick up. “As much as 90% of our GSM service would be riding on our existing CDMA networks. We would go on adding more towers depending on our need. Also, we may re-look at our capex plans for this year,? said Mukund Rajan, MD, TTML.
Most of the Rs 1,000 crore capex for this financial year will be raised through loans. However, according to Venkatesan, this will increase the net debt only marginally as the company would not need the entire amount immediately. The company currently has Rs 1,900 crore as equity and Rs 20 crore foreign currency convertible bond (FCCB) approved from its stakeholders.
The company is also in talks with Unitech Wireless and Shyam Sistema Teleservices for ?tower sharing? as they gear up to launch their mobile services in Mumbai anytime soon. The occupancy ratio at 21 st century currently ranges between 1.4-1.5, which is expected to increase to 1.7-2 by March 2010.
The GSM launch will give the first push as the firm plans to roll out GSM on most of its existing tower infrastructure.
Recently, Vodafone Essar got an approval from foreign investment promotion board (FIPB) to hive off its towers and related infrastructure business into a separate arm called Ortus Infratel.
