Bharti Infratel is in talks with a consortium led by KKR to acquire $11 billion Indus Towers, which is likely to strengthen company’s balance sheet. According to a report published by The Times of India, the consortium comprising KKR, Canada Pension Plan Investment Board, Abu Dhabi Investment Authority and GIC Singapore will invest $5 billion in a multi-phase acquisition, in which Bharti Infratel, first, will acquire nearly 58% shares of Vodafone, Idea Cellular and Providence Equity Partners in Indus Towers.
Bharti Infratel owns 42% in Indus Towers and is likely to buy 45-50% stake for $5.5-6.5 billion, the report citing sources said. However, the company is facing competition from Brookfield Asset Management, whose deal with Reliance Communications currently hangs in balance. Brookfield is also reportedly eyeing to acquire combined 53.15% shares of Vodafone India and Idea Cellular in Indus Towers.
Brookfield’s Rs 11,000 crore deal with Reliance Communications is also under review, and the company is reportedly going to re-negotiate the deal at a lower price due to lack of additional Aircel tenancies. Although, with the deal amount being as high as $11 billion, and Bharti Infratel already owning 42% in Indus Towers, it is Bharti that seems best positioned for the deal.
After Bharti Infratel acquires Indus Towers’ shares, the consortium will increase its shares from 10% to nearly 45% to become the single largest shareholder. Indus Towers is world’s largest wireless infrastructure company and has 1,23,000 towers. If the KKR-Bharti Infratel- Indus Towers deal is completed, it is likely to be the largest global transaction of this kind. With this, KKR is aiming to be able to command the premium valuation, which is with very few mobile operators globally. Earlier in March, Bharti Infratel’s parent Bharti Airtel had sold 10.3% stake to KKR-led consortium for Rs 6,194 crore.
On the back of the proposed deal, Bharti Infratel’s shares on Wednesday surged as much as 2.9% to Rs. 411.50 in early trade and was the top percentage gainer on the NSE index.