GTL Acquires Aircel Towers for Rs. 8,400 Crore
GTL Infrastructure has acquired Aircel Cellular tower business for Rs 8,400 crore. The all cash deal will see GTL acquire 17,500 telecom towers from the company.
GTL is to raise the money through a mix of debt and equity. Manoj Tirodkar, chairman of the company said, "This is the largest all-cash asset purchase transaction in Indian corporate history. We expect to fund this transaction through fresh equity of Rs. 3,400 crore; this could go up to Rs. 4,000 crore if required. The balance 5,000 crore will come through debt funded by a consortium of banks syndicated by SBI Caps."
He further indicated a possibility of a further investment of Rs. 700-800 crore depending on the demand from customers. Currently the tower infrastructure can support two tenants.
The total number of towers with GTL will be near 32,500 after the acquisition. The deal is expected to be completed by May 2010 and will make GTL the world’s largest tower company, replacing American Tower Corporation. This acquisition takes the total investment of the company to Rs. 14,000 crore in the country, of which Rs 10,000 crore has been spent on the development of telecom infrastructure in the rural areas.
Aircel had committed additional 20,000 towers which will be transferred to GTL in the next three years, taking the total number of towers to 50,000. In urban areas GTL’s towers will increase from the current 1,350 to 9,400 towers.
GTL reported revenue of Rs. 274.6 crore and net profit of Rs. 2.8 crore for the year ended March 31, 2009 and expects earnings before interest, taxes, depreciation and amortisation of more than Rs. 1,200 crore by financial year 2011.
Citi and Barclays advised GTL on the deal while Aircel was adviced by Nomura, Rothschild and Standard Chartered. Aircel plans to use the funds for expansion and upgradation as it aims to increase subscriber base from 31 million to 100 million by 2012. Aircel plans to invest another $5 billion by financial year 2013.
Gurdeep Singh, CEO of Aircel said, "Today, we have a market share of 6 per cent. We want to touch 11 per cent in the next three years. I do not think the current price war is sustainable. We would like to differentiate ourselves on the basis of value added services (VAS). We feel that by 2012, VAS will contribute 25 per cent of the revenue."
Many telecom companies are either selling or transferring their tower infrastructure to another entity to reduce costs. Firms like GTL and Tata-Quippo are in high demand in such a market condition. Depending on demand the tower companies are expected to earn back their capital expenditure in 3 12 years.
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