Tata-Quippo looks to rope in partner

Tower Co To Offload 10% Stake For Rs 1,500 Crore; Plans To Complete Deal In Two Months

TATA-QUIPPO, the world's largest independent tower firm, is looking at bringing a financial partner into the firm. The financial partner will get around 10% in the Tata-Quippo combine for around Rs 1,500 crore, Sunil Kanoria, MD of Quippo, said while adding that the deal will be completed within the next two months. In an interaction with ET, Mr Kanoria also said that the tower company Quippo-WTTIL (Wireless TT Info Services) was looking at listing on the bourses within a year. 
    Currently, Quippo Telecom Infrastructure and a group of investors together hold 46% in the tower company, with the Tatas having the remaining 54%. 
    "Quippo, GIC Singapore (owned by Singapore government), IDFC Private Equity and Oman Investment Fund (OIF) as a block jointly hold 46% in the tower arm. Quippo had raised a debt of about Rs 1,500 crore, which we want to retire by converting it into equity. The financial investor will therefore get about 10% equity and we will use this to pay off the debt we raised from IDFC," Mr Kanoria added. 
    He also said that Quippo and the block of investors would continue to have a 46% stake in the tower firm. "The only difference is that one or two large funds who buy out this debt will become part of this block that has a 46% stake in the Quippo-WTTIL tower firm," Mr Kanoria said, adding: "We will continue to have management control of Quippo-WTTIL." 
    According to him, Quippo-WTTIL was on track to post profits in the next financial year. 
    Last week, Quippo-WTTIL had announced that they had entered into an agreement with Tata Teleservices Maharashtra to buy out the latter's entire portfolio of 2,535 towers in Mumbai, Maharashtra and Goa at an enterprise value of Rs 1,318 crore, valuing each unit at Rs 52 lakh. The Quippo MD said the deal also envisages a future guarantee from Tata Teleservices Maharashtra for rolling out an additional 4,000 towers. 
    Quippo Telecom is also in the process of being merged with parent firm, the Srei group of companies. Post merger, Srei will have about 12% economic interest in Quippo-WTTIL," Mr Kanoria said. 
    Quippo-WTTL now boasts of a portfolio of about 38,000 towers and Mr Kanoria said the company was looking at increasing this to about 60,000 over the next three years. He also dismissed the possibility for large tower companies such as Indus (which has over 125,000 towers), Bharti Infratel or even Reliance Infratel posing serious threats to independent infrastructure firms. 
    "Our tenancy ratio is over 2, which is not matched by any other tower firm. This is an indicator of the quality of our infrastructure. The number of towers don't matter," he said. He also pointed out that while Indus (a JV between Bharti, Vodafone and Idea Cellular) had superior numbers, this was on account of the overlap between the towers of its three stakeholders. "Both Indus and Reliance Infratel have towers, but they don't have the tenants. On the other hand, we do not build a new tower unless we have three assured customers," he added.