Tata Tele says will dilute Viom stake down the road

A company with just 50 telecom towers in September 2005, which came up on an investment of Rs 1 crore, became a Rs 20,000 crore entity with 37,000 towers and 80,000 tenants by 2010.
It’s the kind of growth that puts promoters in a dilemma on what to do next - enjoy the ride or dilute to finance a step-up into the next orbit.

For Anil Sardana, the managing director of the unlisted Tata Teleservices (TTSL), it’s a dilemma he would rather have.
TTSL holds 54% stake in Viom Networks Ltd (formerly known as Quippo WTTIL), whose enterprise valuation is over $3.5 billion.
On the one hand, the paltry investment made in the tower firm is growing marvellously, but on the other, TTSL has had the perennial problem of huge debt to address.

TTSL is an unlisted firm, so does not provide details of its debt or accounts.

“I am not saying that the thought of stake dilution will not come up. It will, in future. But for now this business is growing so fast. Our investment in Quippo-WTTIL has actually doubled,” Sardana told DNA on Wednesday.

Added to Sardana’s aspirations is the huge interest from big fund houses in passive telecom infrastructure.

Macquarie SBI Infrastructure Fund, for instance, picked up about 11% stake in Viom Networks for $304 million or Rs 1,420 crore from Quippo through a dilution in the stake of its shareholders, who include IDFC, GIC-Singapore and Oman Investment Fund.
Some analysts see value in the stake dilution for TTSL.

“As an independent entity, TTSL has a net debt of about Rs 4,000 crore at present. If you take Tata Teleservices Maharashtra’s debt into account, the listed entity within TTSL, then it comes to around Rs 8,000 crore. TTSL’s 54% in Viom can fetch about Rs 7,000 crore now. which may be put to good use for various expansions,” said a Mumbai based analyst tracking the telecom sector, who did not wish to be named.

A pan-India code division multiple access (CDMA) operator, TTSL entered the global system for mobile communications (GSM) arena after getting a unified access services licence from the department of telecommunications.

The company received GSM spectrum in eight circles - Kerala, Andhra Pradesh, Chennai, Tamil Nadu, Karnataka, Madhya Pradesh, Bihar, and Orissa.

In June, TTSL’s overall market share including CDMA and GSM was 11.4%, as against Reliance Communication’s 17.4%, Vodafone’s 17.1% and Idea’s 10.8%.

Meanwhile, the Viom is also plans to get listed in about two years.

“The process of the merger of these two firms is now complete and the new firm, Viom Networks, is on track. We can now initiate our listing process such as filing DRHP etc,” said Sunil Kanoria, vice-chairman of the company.

Viom plans to add another 25,000 towers in the next two years at a capex of about Rs 8,000 crores, Kanoria said.