Bharti, Vodafone, Idea may merge tower biz

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One of the options being discussed is to give equity proportionate to the number of towers that the three companies own. According to industry estimates as of August, Bharti had 40,000 towers, Vodafone had 20,000 and Idea owned almost 10,000 towers. Going by this formula, Bharti could own 57% in the merged entity while Vodafone and Idea cellular could get 28.5% and 14.5% stake respectively.

Confirming that initial discussions have begun, sources within the GSM industry said, "It is only a natural progression of the earlier decision to voluntarily share infrastructure. If the merger goes through, it would enable the operators to commercially tap the potential of their infrastructure."

Bharti and Idea had earlier announced their decision to demerge their infrastructure into separate companies in a bid to unlock the value by offloading minor equity. "Merging their tower business would naturally push up the valuation higher. It will also bring down the cost of operation drastically for the operators," said a market analyst. It could result in additional revenues for the three companies as the infrastructure can be offered to new entrants who have recently applied for licence. If the talks conclude successfully, then the merged entity could give tough competition to the likes of American Tower Corporation and Reliance Communications , that also have jumped into the tower business. More than 3 lakh towers are required by 2010, when the user base is expected to touch 500 million.

Taken from Business Line

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