Hiving off its tower arm to benefit Idea; stock rises by 4% in anticipation

According to certain reports, Idea Cellular plans to sell 100 per cent stake in its tower arm with an enterprise value of USD 1 billion. Part of the Aditya Birla Group company plans to use the fund to pare down its humongous debt levels.

Idea’s tower arm consists of close to 11,000 towers which is pegged close to a billion dollar.

As per media reports, Idea has reached out to America Tower Corp, Bharti Infratel and Brookfield for tower sale. In recent times, there have been too many activities taking place in the telecom tower space amongst the major telecom players in the country.

Reacting to the news, shares of Idea surged more than 4 per cent in trade at Rs 78.9 on NSE. Idea Cellular stock has been a rank underperformer since the launch of Reliance Jio in early September. Stock has also not been supported by financial performance of the company which has been on a decline trajectory, resulting in stock correcting by close to 20 per cent in the past 3 months.

As a breather to the stock, sale of tower arm would help in paring the existing pile of debt and would also help in competing with new and existing telecom players.