Standalone tower cos to take on Bharti-Vodafone-Idea combine
Standalone tower cos plan to consolidate their businesses to compete with Bharti-Vodafone-Idea combine company Indus.
By Joji Thomas Philip & Anto T Joseph, TNN |
New Delhi: A Third Front may be in the offing in the multi-billion dollar telecom tower business in India. Stand-alone tower companies such as Essar Telecom Tower & Infrastructure, GTL, Quipo, Xcel telecom, TowerVision are planning to consolidate their businesses to compete with the big three���the Bharti-Vodafone-Idea combine company Indus, Reliance Communication���s RTIL and Tata���s yet-to-be named tower company.
���Stand-alone tower companies have held several joint meetings. Nothing has been finalised,��� the CEO of a the tower company, who���s part of this move, told ET. On the other hand, the spokesperson of one of the largest independent tower companies said: ���We���ve had meetings. This is not to form a single front, but to grow the business together. The sector is showing massive growth���these meetings have only helped us make plans to tap the business potential better.���
���Stand-alone tower companies have held several joint meetings. Nothing has been finalised,��� the CEO of a the tower company, who���s part of this move, told ET. On the other hand, the spokesperson of one of the largest independent tower companies said: ���We���ve had meetings. This is not to form a single front, but to grow the business together. The sector is showing massive growth���these meetings have only helped us make plans to tap the business potential better.���
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A leading executive with another tower company clarified that the objective is not to merge businesses of different companies but look at opportunities jointly. ���There���s no merger or financial stake transfer in the pipeline. The talks, which are in the initial stage, revolve around coordination and cooperation amongst stand-alone tower companies. In the process, there could be some mergers or buy-outs.
Consolidation is inevitable but that is not the purpose of the ongoing talks.��� Giving out more details, an executive with an infrastructure company, which also has a telecom tower arm, said, ���So far, the talks have been about common external factors. We are not trying to form a cartel. We are only exploring ways to help each other with land acquisition for setting up towers. Most of the towers that independent companies are building are in rural India, where power supply is a huge issue. If we jointly implement solutions to tackle this issue, it would reduce our capex considerably���.
Industry analysts say that stand-alone tower companies will be forced to work together and also consolidate in order to compete with the hived-off independent infrastructure arms of large telecom companies. These have considerable advantages due to their size and spread. For instance, Indus Towers, the recently-announced joint venture between Bharti, Vodafone and Idea has over 72,000 sites, Bharti Infratel has over 21,000 sites while Reliance���s RTIL is slated to end this fiscal with 40,000 towers. In comparison, none of the stand-alone tower firms have even 5,000 towers.
The last couple of months have witnessed consolidation amongs the independent tower firms. Earlier this year, mobile service provider Spice Communications sold its tower arm to Srei Infrastructure (which owns stand-alone tower company Quipo) for Rs 500 crore. Last month, Morgan Stanley picked up a stake in telecom infrastructure company ��� TowerVision. In November 2007, Xcel Telecom, which has already obtained a commitment of about $500 million from US-based investment fund Q to undertake buy-outs, acquired Tics Telecom, a Punjab-based telecom tower company.
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