Tata Teleservices may reduce Viom stake by half

KOLKATA | NEW DELHI: Viom Networks is seeking a valuation of about Rs 20,000 crore, excluding debt, for its fund-raising exercise which could see Tata Teleservices cut its majority stake in the telecom tower company by more than half, with copromoter Srei Group also diluting a part of its holding, a top official said.

“The Tata Group definitely has no issues about bringing down its stake. It will not sell its entire (54%) stake in Viom. I think they will retain 26% as it is a strategic asset for them,” Sunil Kanoria, Viom’s vice chairman & managing director, told ET.

Tata Teleservices, the telecom arm of the Tata Group, did not reply to ET’s queries on its potential stake dilution in Viom. “Srei is also looking at some encashment and is open to reducing its 18.5% holding by a few percentage points if it gets the right valuation,” Kanoria added.
The stake dilutions could result in a change in ownership structure of the company which is looking to raise Rs 1,500 crore through either a local or an overseas listing or a private placement of shares. Kanoria said though Viom’s board had recently cleared the company’s capital raising plans, any exercise would transpire only post-June once a new government is in place.

He added that the Viom leadership is in talks “with six banks” to finalise the ideal option to raise fresh capital, and is also talking to several private equity investors who want to buy into the tower firm, given the prospect of steady cash-flows over a 10-to-15 year term through existing long-term rental contracts. He added the company’s debt is near .`6,700 crore.

Apart from Tata Tele with 54% and Kolkata-based Srei Group, with 18.5%, a clutch of financial investors — IDFC Private Equi-ty, SBI Macquarie, Oman Investment Fund and GIC of Singapore — collectively own 27.5% of Viom. Kanoria said the fund-raising move will see some of the existing PE players exit the company to be replaced by new ones.

Unlisted Viom claims to be the largest independent telecom infrastructure firm with 42,000 towers nationwide and 90,000-plus tenancies with a tenancy ratio of 2.3 times. By comparison, its listed rival, Bharti Infratel has 35,376 standalone towers with a tenancy of 1.8 times and a market capitalisation of .`33,340 crore.

The possibility of a sharp reduction in the Tata Tele holding in Viom comes when the telecom company is battling losses amid fierce competition and high debt. In the last financial year, Tata Teleservices incurred a net loss of.`4,858 crore on an operating income of .`10,799 crore while its debt had reportedly swelled to.`28,000 crore last November.

Viom plans to use fresh capital to expand its pan-India tower network and reinforce its global operations, with an immediate focus on managing tower networks in Myanmar. Its Singapore-based offshore unit, Viom Networks Singapore, will initially address tower management opportunities in Myanmar and eventually scout for similar deals in markets like Malaysia, Indonesia and Bangladesh.

“Our current focus is on Myanmar, but we are also looking at Bangladesh, where Viom is unable to go immediately since the country’s telecom laws don’t allow foreign tower companies to operate there,” said Kanoria.

Viom is also eyeing consolidation opportunities in international markets. “We see consolidation opportunities emerging in Malaysia and Indonesia where local telecom operators may want to hive off their tower networks and create a tower company,” said Kanoria, but declined to reveal potential targets.