Sunil Bharti Mittal

"This investment reinforces the positive outlook for the telecom infrastructure sector. The long-term investment horizon of the investors aligns well with the capital needs and business cycles of Bharti Infratel."

Sunil Bharti Mittal
Bharti Airtel

Bharti Airtel Ltd. has sold a 10.3 percent stake in its tower arm to private equity firms Kohlberg Kravis & Roberts (KKR) and Canada Pension Plan Investment Board (CPPIB) for 6193 crore (USD 951.6 million). The deal was sealed at 325 per share.

Bharti Airtel will use the proceeds to pare debt. Its stake in the tower unit will fall to 61.7 percent after the transaction. The company had net debt of 97,395 crore at the end of December 2016, up from 83,888 crore at the end of March 2016. It reported revenue of 60,300 crore for 2015-16.

Bharti Infratel has about 90,000 telecom towers and reported revenue of 5595 crore for the financial year that ended in March 2016. This is the second time KKR is investing in the tower company; it was previously invested in Bharti Infratel between 2008 and 2015.

Sanjay Nayar, member and CEO of KKR India, said that the PE firm will again work with the management of Bharti Infratel for the second phase of its growth.

The deal comes after Bharti Airtel scrapped its plan to sell a controlling stake in the tower arm.

Deborah Orida, managing director and head of private equity for Asia at CPPIB, said this investment is aligned with CPPIB's strategy to invest long-term capital in industry-leading companies as well as provide an opportunity to invest in a business with steady cash flows.

For Bharti Airtel, its strategy to monetize its tower arm comes less than a week after it announced its plan to acquire the 4G business of Tikona Digital Network for 1600 crore. The telecom major also announced the acquisition of Telenor India last month for an estimated price of around 2000 crore and signed a spectrum trading deal with Aircel last year to expand its 4G services.

The deal is the latest in the telecom tower infrastructure segment in India.

Other Tower Deals

Earlier this month, Idea Cellular Ltd. and Vodafone India Ltd. indicated they would sell shares in Indus Towers as part of a merger deal between the two companies. Vodafone holds a 42 percent stake in Indus, Idea owns 11.2 percent stake, and Bharti Airtel controls the remaining.

In December 2016, Reliance Communications had agreed to sell a majority stake in its tower business to Canada's Brookfield for USD 1.6 billion. American Tower Corporation had bought a 51 percent stake in telecom tower firm Viom Networks Ltd. for 7635 crore in 2015.

Both Brookfield and ATC were eyeing other tower businesses and had considered buying a majority stake in Bharti Infratel, media reports said. Several PE firms are also looking at acquiring Tower Vision India Pvt. Ltd.

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