Telecom stocks buzz on back of anticipated tower deal

In what can be seen as fresh capital inflows into the debt-ridden telecom sector, Bharti Infratel along with a consortium of funds is in talks to buy stakes in Indus Towers.

Reacting to the news report, the telecom sector stocks were ringing on the bourses. Also, an anticipation of good set of quarterly revenues by the telecom companies is helping the upswing. Bharti Airtel was contributing most to the gains of the S&P BSE Telecom as well as the S&P BSE SENSEX.

The global funding consortium is led by KKR and consists of Canada Pension Plan Investment Board, Abu Dhabi Investment Authority and GIC Singapore. The funding consortium is in talks to buy the tower business from Bharti Infratel and Indus Towers for a consideration of around US$11 billion, reported a leading news agency.

As an initiation to the deal, Bharti Infratel will buy out part or whole of the shareholding in Indus Towers, which is currently held by rivals Vodafone, Idea Cellular and Providence Equity Partners.

Bharti Infratel along with Indus Towers has a national presence with tower infrastructure across all telecom circles in India. Indus Towers is also the world’s largest telecom tower company with over 122,000 towers. Bharti Infratel owns 42 percent equity interest in Indus Towers.

Earlier, there were reports that Vodafone India Ltd was in discussions with infrastructure companies and private equity funds (PEs) to sell the telecom company’s stake in Indus Towers.

Indian telecom companies have adopted the tower infrastructure sharing business model to avoid huge CapEx deployment in infrastructure and focus on subscriber acquisition. Meanwhile, with huge potential for mobile penetration in India, the telecom infrastructure sector is expected to see exponential growth, making it a profitable and lucrative business. The deal is expected to bring much-needed investments into the sector as well as relieve some of the debt-burden borne by telcos. 

Among telecom sector stocks, Bharti Infratel was trading at Rs. 410.05, higher by 9.85 points or 2.46%; Bharti Airtel was trading at Rs. 399.00, up by 14.95 or 3.89%, Sterlite Technologies was at Rs. 262.65, up 19.35 points or 7.95%. The S&P BSE Telecom index was at 1395.70, up by 41.07 points or 3.03%.