Telco Vodafone Essar has applied to FIPB to hive of its telecom infrastructure business into a new entity called Ortus Infratel and Holdings Pvt Ltd. The entity will hold Vodafone Essar’s 42% stake in Indus Towers, a joint venture between Bharti Airtel, Vodafone Essar and Idea Cellular, reports Economic Times. Apart from this, it will also hold the infrastructure owned by Vodafone Essar.
Indus Towers operates 90,000 towers in around 16 circles. Besides this, Vodafone Essar separately operates 6,000 towers in six circles where Indus is not present. Essar also operates its own independent mobile tower firm, Essar Telecom Infrastructure, which will not be included with Ortus. Essar Telecom Infra has around 4,500 towers and is currently in talks with Tata-Quippo combine.
Essar Group’s Ruias own 33% stake in Vodafone Essar, and shareholding of Ortus will also be along similar lines. Ortus also plans to invest Rs 500 crore, it said in its FIPB application.
The telecom infrastructure sector, in which private equity funds have invested billions of dollars is going through a process of consolidation. This seems to be aided by the falling valuation of
telecom towers. Towers were valued at Rs 78 lakh in Tata-Quippo merger, while in the more recent American Tower's acquisition of Xcel Telecom valued them at Rs 47 lakh.