Bharti Airtel moots $1bn towers IPO
By Mary Watkins in Mumbai
Bharti Airtel, India’s largest mobile phone group by subscribers, is considering raising up to $1bn through an initial public offering of its towers business in a move that could stoke further interest in the country’s telecoms infrastructure sector.
The group, which last year agreed a $10.7bn deal to buy the African business of Kuwait-based Zain, is understood to be holding early stage talks with bankers about listing a stake in Bharti Infratel that could potentially value the towers unit at as much as $10bn.
Analysts said an IPO would give Bharti, which also owns a stake in Indus Towers, additional firepower to spend on improving infrastructure in its newly acquired African business. Shares in Bharti, which last week announced a number of moves to streamline its core business, have performed better than many of its rivals but the African operations have dragged on profits.
An IPO could also provide a possible exit for companies that have recently invested in the towers business.
Bharti Infratel in late 2007 received a $1bn investment from Goldman Sachs, Citigroup, Macquarie Securities, Dubai Investment Bank, AIF Capital, IEP and Singapore’s Temasek. Early the following year, Kohlberg Kravis Roberts, the US private equity group, agreed to invest a further $250m in the business.
Bharti said at the time that both deals would give its towers business an enterprise value of between $10bn and $12.5bn.
However, analysts said that it could be tricky to get an IPO away in the current market environment. The amount of money raised through IPOs in India in the first six months of the year fell more than 80 per cent compared with last year as a number of large companies shelved listings due to weak market conditions.
A probe into the way second generation mobile phone spectrum was awarded in 2008 has also dented confidence in the Indian telecoms sector and hit valuations.
Anil Ambani, the Indian billionaire owner of Reliance Communications, received regulatory approval to list Reliance Infratel, another mobile phone towers unit, but last year opted instead to sell it for $9bn to GTL Infrastructure, an Indian listed telecoms network operator. That deal fell through and Reliance is now in discussions with other groups over a sale of the towers business.
Meanwhile, GTL has itself become a potential bid target after its shares have fallen sharply since June on market speculation that it was having funding problems, something it denies. The head of Viom Networks, an unlisted tower business, recently said talks had been initiated talks with GTL over a possible merger.
Talks between Bharti and bankers are understood to be at a very early stage, according to people close to the process. Morgan Stanley and Standard Chartered are among those in talks to manage the process.
The banks and Bharti declined to comment.
Copyright The Financial Times Limited 2011. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web |
