By 01 March, 2011

Action in telecom tower consolidation continues. Private equity major New Silk Route-controlled Ascend Telecom

Infrastructure Pvt. Ltd. (formerly Aster Infrastructure Pvt. Ltd.) and

India Telecom Infra Ltd. have agreed to merge their telecom tower

businesses. The combination will create and independent tower company

with approximately 4,000 towers, and an average tenancy ratio of over

1.6x, said a statement.

Ascend got its first round of investment from New Silk Route in July

2007.  India Telecom Infra is jointly owned by Infrastructure Leasing

& Financial Services Limited (IL&FS) and TVS Interconnect Systems, a

part of the TVS Group.

Ascend and  India Telecom Infra's customers will include mobile

operators including Idea Cellular, BSNL, Vodafone, Tata Teleservices,

Aircel, amongst others. The companies will be proceeding to file a

scheme of amalgamation with the Honorable High Courts of Andhra

Pradesh and Tamil Nadu to merge ITIL into Ascend after receiving

approvals from all their stakeholders.

"Over the last decade, voice telephony in India has grown at a

phenomenal pace and we are now at the cusp of another revolution in

data usage with tablets, net books and smart phones as the key

enablers. We believe that telecom infrastructure will be the backbone

of this growth and are excited to partner with IL&FS and the TVS Group

to capitalize on this opportunity,” said  Parag Saxena, Founding

General Partner and CEO of New Silk Route.

“The merger of ITIL and Ascend is extremely synergistic and provides

all the stakeholders of both companies’ enormous benefits in terms of

an enlarged management team, increased scale, a pan-India footprint,

and significant operational efficiencies,” said R Haresh, Chairman of

TVSICS.

While there have been several consolidation moves by the larger

telecom tower players, the deal between Ascend-India Telecom Infra

will be the first instance of smaller players merging to compete in

the market. Earlier reports have said owners of both Ascend and TVS

Interconnect tried to sell the firms.

"Telecom tower companies with a relatively large portfolio of towers

offer certain clear advantages to telcos, including rapid rollout over

a large area, and tenancy driven discounts. Further, large tower

companies can access capital markets better to fund growth. These

advantages make it somewhat difficult for the smaller tower companies

to grow, thereby paving the path for consolidation in the industry,"

said a recent report on the industry by credit rating agency ICRA,

adding that it expects consolidation to continue, with the smaller

players either getting acquired or merging with one another to stay

competitive.

Some of the large ticket deals in the telecom tower space include

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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