India's GTL Infrastructure will buy the tower assets of telecom company Aircel for $1.8 billion (Dh6.6bn), three sources said, making GTL one of the largest independent mobile mast companies in the country with about 32,000 towers.
GTL, which has long been the front runner to buy the assets, will pay about Rs85bn for 17,500 telecom towers owned by Aircel, India's No7 mobile operator and a unit of Malaysia's Maxis Communications, said the sources with direct knowledge of the matter.
New mobile operators in India, the world's fastest growing market with monthly signings of new users at more than 14 million, are looking to cut costs by sourcing telecom masts from independent firms.
"Service providers are looking at becoming asset light to concentrate on core operations – that is providing telecom services and not on building and operating towers," said Manesh Patel, Partner (Advisory Services) at Ernst & Young.
The deal would be the largest so far in the Indian telecom tower sector. GTL said in a notice to the bourses it would hold a meeting of its board today to consider strategic acquisitions but did not provide details.
"You can expect an announcement tomorrow," said one of the sources, who did not wish to be named as he was not authorised to speak to the media.
Nomura, Standard Chartered and Rothschild are advising Aircel on the deal, while GTL is advised by Citigroup and Barclays.
"The deal will help GTL add critical mass that will help it extend geographical reach and provide better services," Patel said.
Shares in GTL, with a market value of about $800 million, jumped almost 14 per cent to Rs42.90, their best close in nearly seven months. The Mumbai market gained 0.5 per cent.
Aircel's tower business attracted interest from American Tower, Crown Castle, Bharti Infratel, a group firm of top Indian mobile operator Bharti Airtel, and Tata Quippo, a joint venture between the Tata conglomerate and Quippo telecom. As new telecom companies start operations in India, operators are looking to save on costs by sourcing infrastructure including mobile masts from existing telecom firms and independent tower companies.
The Indian mobile market has attracted several global players such as UK's Vodafone, Japan's NTT and the UAE's etisalat.
According to a Reliance Equities report in September, the number of telecoms towers in India in the 2010 financial year is estimated to grow to 337,375 from an estimated 282,074 a year earlier.
The consolidation spree in mobile infrastructure was kicked off in 2007 when Bharti Airtel, Vodafone Essar and Idea Cellular decided to pool their resources and spun off their towers into an independent firm, Indus Towers.
This was followed by No2 player Reliance Communications selling a stake in its tower arm Reliance Infratel to private equity firms for $400m.
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