Carlyle & AT eye RCOM tower biz stake

MUMBAI: US private equity giant Carlyle and American Towers have formed a partnership to buy and own cellphone tower assets in the country, a person familiar with the situation said. The duo may also bid for buying a minority stake in the tower business being spun off by Reliance Communications, the country’s second-largest wireless service provider.

Carlyle, which last week announced plans to become mortgage giant HDFC’s second-biggest shareholder, and American Towers are keen to take advantage of opportunities in the booming telecom business in India. The two firms want to own a telecom tower business in the country. American Towers will own a majority stake, with Carlyle holding a minority stake.

A Reliance Communications spokesperson declined to comment. Carlyle officials were not available for comment.
India’s telecom industry has been a success story ever since companies started slashing tariffs, embarked on a massive marketing campaign. Cellphone companies such as Nokia and Samsung helped the cause by dropping prices of phones.

Reliance Communications announced some time ago its decision to spin off its tower business into a 100% subsidiary. This is just a prelude to offloading a 10-15% stake in the company to a strategic or a financial investor. JP Morgan is the advisor to Reliance Communications. The preliminary bids from interested investors is expected by June 7 and the winner is expected to be announced by June 30.

The value of the tower business of Reliance Communications is estimated at about $4 billion. The company owns a country-wide network of towers for its CDMA and GSM business and is planning a big expansion.

Owning the physical infrastructure on its books is not a big necessity and the towers can always be shared by different companies. The towers are also the same for both CDMA and GSM business except for the electronics.