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Quippo Merges With Tata Tele’s Tower Arm

05 January, 2009

Tata Teleservices has announced merger of telecom tower arm with SREI Group-promoted Quipo Telecom Infrastructure Ltd (QTIL). The deal will involve Quippo picking up a 49% stake in Wireless Tata Telecom Infrastructure Ltd for Rs 2,400 crore. The second part of the deal

involves Quippo merging its telecom towers with Tata Tele’s tower arm. The deal values the combined entity at $2.4 billion.

Quippo will have the management control of the combined entity. This is to ensure that the company functions as an independent tower company with non-discriminatory infrastructure access to all mobile service providers.

With Quippo bringing in its all its 5,000 towers, the combined entity will have around 18,000 towers. With this the merged firm will be able to emerge as a major player in telecom infrastructure space, and the largest independent player. Other major players are Indus Towers (a JV of Bharti, Vodafone and Idea with over 84,000 towers), Reliance Telecom Infrastructure (46,000 towers) and Bharti Infratel (27,000 towers).

The decision of the new entity to remain independent will help cater to the new entrants like Swan-Etisalat, Unitech-Telenor and Datacom. The new entrants would be planning to expand rapidly, and Tata-Quippo combine being the largest independent tower firm can exploit this

opportunity to the full. The firm will also benefit from the launch 3G services in India.

The deal also signifies a fall in the prices of telecom towers. Earlier deals involving Reliance Communications and Bharti Infratel valued each tower between Rs 1.6-2 crore, where as this deal values each tower at Rs 61 lakh.

Quippo strenghtened its position in the telecom tower space by buying out Spice Communications tower business for Rs 500 crore, in which it added 875 telecom towers. Quippo has also raised private equity funding as other players like Bharti Infratel and Indus Towers have raised in this space. Quippo raised $35 million from IDFC Private Equity and Singapore’s GIC in 2007, and raised $185 million from Oman Investment Corporation, DB Zwirn and existing investors last year. These investors hold more than 80% stake in Quippo.

The merged firm plans to expand to 50,000 towers in the next two years. The deal for  Tata Teleservices comes soon after its transaction with Japanese giant NTT DoCoMo, to whom the CDMA operator sold a 26% stake for $2.7 billion in November last year. Tata Tele is planning its GSM launch later this month. The only other CDMA player, Anil Ambani-led Reliance Communication launched GSM services in Mumbai yesterday.

The deal continues the process of consolidation in telecom tower business. There are other independent operators like Gurgaon-based Independent Mobile Infrastructure, GTL and Xcel Telecom.

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1 Comment
Nitin Gupta . 6 years ago

The strategy for valuation and other arrangements in this deal seems highly “influenced”. Firstly, there is clear underevaluation of the Telecom Towers in attempt to lower down the market standard price ( forget the construction cost). Secondly, if you see Quippo’s parent company’s ( SREI) deal with BNP Paribas last year. There also they gained the management control despite being in the minority stake ( somewhere around 49%). I am surprised as to how Tata Teleservices agreed at such a deal.

Quippo Merges With Tata Tele’s Tower Arm

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