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GTL Infra to buy Aircel towers

Posted: 20 Jan 2010     Print Version  Bookmark and Share

Keywords:telecom tower  India telecom  communications 

In a definitive agreement, GTL Infrastructure Ltd (GTL Infra) will buy the telecom tower business of Aircel Ltd and its subsidiaries (Aircel) in an all-cash deal valued at an enterprise value of Rs.8400 crores. This transaction will make GTL Infra the world's largest independent tower company with a portfolio of more than 32,500 towers across all 23 telecom circles.

GTL Infra has structured the transaction through a SPV to purchase Aircel's 17,500 existing towers that comprise 21,000 tenancies (i.e. a tenancy ratio of 1.20x). In addition to the existing towers, Aircel will also commit 20,000 towers over a 3 year period. On completion of this roll-out, GTL Infra is expected to have a portfolio of more than 50,000 towers across India.

Aircel is the 5th largest GSM mobile service provider and one of the fastest growing telecom operator in India with over 3.10 crore (31 million) subscribers. Aircel is promoted by Apollo Hospitals Group and Maxis Communications Berhad, which has a telecom presence in Malaysia, Indonesia and India.

Referring to the transaction, Suneeta Reddy, chairperson of Aircel said, "Aircel is proud to be part of this significant transaction in India. We have a long standing relationship with GTL Infra and we believe in their telecom engineering and infrastructure capabilities in servicing our future requirements. We see this as not just

a deal but a long term partnership. Following the transaction, Aircel will be reinvesting the proceeds to better serve its customers across India".

Commenting on the transaction, Manoj Tirodkar, chairman, GTL Infra, said, "This is a transformational deal for GTL Infra, Global Group and the Indian telecom industry. It significantly enhances our scale and presence, cementing our leadership in telecom infrastructure space. We will continue to be an independent and neutral player that focuses on reducing the capital and operational expenditure of service providers, in turn ensuring lower telecom tariffs for Indian consumers. We are also developing several innovative service offerings like energy management, operation and maintenance with emphasis on rural India so that the service providers can offer services at lower tariffs in rural areas. I am thankful to the management of Maxis and Aircel for their commitment to this transaction, in particular, Gurdeep Singh, Sudhir Mathur and their teams".

On completion of the transaction, GTL Infra would have deployed a capital of Rs.14,000 crores, for the development of passive telecom infrastructure in India. We expect to fund this transaction through fresh equity of Rs. 3,400 crore and the balance through debt funded by a consortium of banks syndicated by SBI Caps.

The transaction is transformational for GTL Infra and will enable it to target:

Tower base of over 50,000 by FY 2013

Pan-India presence across all the 23 telecom circles

Industry leading tenancy of 2.3 on towers by FY 2013

Decisive competitive advantage to attract new tenants due to pan India presence and enhanced scale

Gurdeep Singh, chief operating officer of Aircel said "We believe this deal will help our respective organisations to focus on our core competencies and benefit from economies of scale. I am also thankful to our bankers, led by SBI, for their understanding of our business needs and for their support in this landmark transaction". The transaction will also help significantly improve operational efficiencies of GTL Infra.

Talking about the synergies, Prakash Ranjalkar, whole time director, GTL Infra said, "The resulting higher density of sites in overlapping circles will result in reduced opex per site due to economies of scale. We expect that our network will benefit the new 2G operators and will also play a significant role to help 3G operators to launch their services immediately. By FY 2011, GTL Infra expects to have a recurring revenue base of Rs. 1,800 crore with an EBIDTA of more than Rs. 1,200 crore."

This transaction is subject to regulatory and other approvals, and is expected to be consummated over next 4 to 5 months. GTL Infra had Citi and Barclays as financial advisors for this transaction while Nomura, Rothschild and Standard Chartered were the advisors to Aircel.

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