Moneycontrol
Nov 29, 2016 08:23 PM IST IST | Source: Moneycontrol.com

Idea Cellular up 5% on plan to sell entire stake in tower arm

Idea Cellular shares rallied 5 percent intraday Tuesday after sources close to the telecom operator told CNBC-TV18 that the company is likely to sell 100 percent stake in its tower subsidiary.


Idea Cellular shares rallied 5 percent intraday Tuesday after sources close to the telecom operator told CNBC-TV18 that the company is likely to sell 100 percent stake in its tower subsidiary.


The Aditya Birla Group company has dropped its earlier plans to sell a minority stake in the business and now it is looking to sell 11,000 telecom towers for close to USD 1 billion.


Idea Cellular has reached out to America Tower Corp, Bharti Infratel and Brookfield for tower sale, sources said, adding that it is likely to retain its stake in Indus Towers.

Indus Towers is a joint venture between entities of Bharti Infratel, Vodafone India and Aditya Birla Telecom.


Usually when core telecom sector becomes competitive, companies are likely to sell-off tower assets and use the proceeds to pump up telecom operations, repay debt or fund expansion and network rollout, Nitin Soni of Fitch Ratings said.


With retaining underweight rating and target price of Rs 60 on Idea, Morgan Stanley says the company has 9,800 of its own towers with a tenancy ratio of 1.67x. It values these towers at around USD 1.1 billion, assuming Enterprise value per tower of USD 1,08,000, a 5 percent discount to Bharti Infratel's EV/tower at current market price.


Including Idea's 16 percent stake in Indus, the brokerage house values its overall tower portfolio at USD 3.3 billion.

At 11:35 hours IST, the stock was quoting at Rs 79.25, up Rs 3.45, or 4.55 percent on the BSE.

Sections
Follow us on
Available On