India's largest telecom firm Bharti Airtel on Tuesday sold 10.3% stake in tower arm Bharti Infratel to a consortium of KKR & Canada Pension Plan Investment Board (CPPIB) for Rs 6,194 crore. The proceeds of the sale will be used to reduce debt.
India's largest telecom firm Bharti Airtel on Tuesday sold 10.3% stake in tower arm Bharti Infratel to a consortium of KKR & Canada Pension Plan Investment Board (CPPIB) for Rs 6,194 crore. The proceeds of the sale will be used to reduce debt.
The transaction has been done at a price of Rs 325 per share, a shade above the current market price.
On Tuesday, Bharti Infratel stock closed at Rs 318.75, up 2% from the previous close.
After the transaction, Bharti Airtel's stake in the Bharti Infratel stands at 61.7% and that of KKR & Canada Pension Plan Investment Board (CPPIB) at 10.3%.
Bharti Infratel, which is the telecom tower infrastructure provider for the parent and other players, has over 38,000 plus towers across 18 states and 11 telecom circles in India. The company deploys, owns and manages towers and communications structures for all wireless operators.
Apart from Airtel, other leading players such as Reliance Jio, Idea Cellular, Tata Teleservices, BSNL and Reliance Mobile are among its key clients.
"This investment by a consortium of marquee long-term investors underlines the confidence of the global investors in India's growth story and the government's Digital India initiative in particular," said Sunil Bharti Mittal, chairman, Bharti Airtel.
He said it further 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."
This transaction makes it KKR's second investment in Bharti Infratel. Previously, the funds managed by KKR had invested in Bharti Infratel during the period 2008 to 2015.
Post the transaction, the stakes held by KKR and CPPIB (combined) will be the single largest public shareholder block, the company said.
In a report earlier this month, CLSA said the concerns were overdone for Bharti Infratel and that the risk-reward was favourable. The stock broking firm believes that the tenancy hit is likely only after 2018-19 and valuation suggests the stock is now pricing in a pessimistic scenario on growth. Infratel will add 16,000 tenancies annually as there will still be three large operators in India mobile.
Analysts believe that the recently announced Vodafone-Idea merger could also pave the way for Infratel to acquire towers owned by Idea and Vodafone and also add to its 42% stake in Indus Towers. This, many believe, would be positive catalysts for its growth and valuation.
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