After its mega-merger move with Anil Ambani's Reliance Infratel fell through, Manoj Tirodkar's GTL Infrastructure Ltd is on the prowl again. GTL Infra could be looking at smaller targets in the Indian passive telecom infrastructure space as it seeks to ramp up its inorganic growth in consolidating industry.

GTL Infra is now eyeing companies with 3,000-5,000 towers for deals which may prove to be less burdensome on its balance sheet and be easier to consummate. "There are 3-4 smaller tower firms that are potential targets. These are standalone opportunities worth a couple of hundred million dollars though there are now specific numbers to talk about at the moment," said a source directly familiar with the matter.

Several mid to small-sized player in the Indian tower space were eyeing a sellout as scale becomes priority in the fast consolidating industry.

New Silk Route-owned Ascend Infrastructure (earlier Aster Infrastructure) was reportedly put on block and is seeking a Rs 500 crore enterprise value. The firm has around 4,000 towers. Other

companies like TVS Interconnect Systems and Independent Mobile Infrastructure were also reportedly put on block.

GTL spokesperson declined to comment on the report, when contacted.

GTL Infra had emerged as one of the largest independent tower players after the Rs 8,400-crore acquisition of  Aircel’s tower business earlier this year. The deal had increased the number of towers to 31,000 units as of July 31. The Rs 50,000-crore merger deal with Reliance Infratel, which was a complicated transaction involving both cash and equity, would have increased this tally to over 80,000 units.

After the Aircel deal, GTL Infra's debt stands at around Rs 7,400 crore with a debt to equity ratio of 1.2. The firm reported a 53% year on year growth in revenues during Q1 FY11 to Rs 110.46 crore with EBITDA growing 64% to Rs 63 crore. The shares of GTL Infra closed at Rs 44.75 today, up marginally by 0.79%. The company has a market capitalisation of Rs 4,284 crore at this level.

The valuation of towers have also settled down during the last one year between Rs 45 lakh and Rs 60 lakh, as compared to Rs 1-2 crore reached in late 2007 and early 2008. Also, smaller players typically focus on their tenancy ratio (the number of telecom operators sharing a particular tower).

While there have been several large ticket deals in the telecom tower space like GTL-Aircel and Tata-Quipo, few firms have also scaled by buying smaller Indian players. Nasdaq-listed American Tower had acquired smaller players like Xcel Telecom and Transcend Infrastructure before going ahead with a relatively bigger acquisition of Essar Telecom Infrastructure.

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