India's Reliance Communications (RCOM) is reported to be planning to sell another 5% stake in its wireless tower business (RTIL) by the end of this year. The Economic Times reports that JP Morgan has invited bids for the stake – which it aims to sell for more than the $345 million that the company got for the 5% it sold earlier this year. The sale at the time valued the tower operations at US$6.75 billion.
Reliance wants the business to achieve an enterprise valuation of US$9 billion – which would require the extra 5% to sell for at least US$450 million.
The tower business currently counts Reliance' CDMA network as its prime customer and also provides services to Reliance's GSM network. There have been regular rumours that several operators are considering merging their tower operations to create an independent rival to RTIL.
According to recent analyst reports, Bharti Airtel had around 40,000 towers, Vodafone had 20,000 and Idea owned almost 10,000 towers. If the three operators merged their tower operations, as has been rumoured – based on volume of tower assets, Bharti could own 57% in the merged entity while Vodafone and Idea cellular could get 28.5% and 14.5% stake respectively. Naturally, the valuation of individual towers, and the ability for larger towers to be sub-leased to other operators would affect this allocation.
RTIL has aprox 14,000 towers – so based on a parity valuation at RTIL's original valueation – a merged GSM tower business with 70,000 towers could be worth around US$33 billion.
Bharti Airtel and Idea Cellular have also held talks regarding a tower merger, although nothing has happened so far.
Source: Cellular News