Aimed to value the telecom tower companies based on market valuation and seeing where fair value paid by acquirer to acquiree or not.

1. Consolidation in Indian Telecom Tower Industry
RESEARCH PROJECT
BY
MANESH PRATAP SINGH, ROLL NO.19 , MBA 2014-17
UNDER THE GUIDANCE OF DR. SHEEBA KAPIL, ASSOCIATE PROFESSOR, IIFT

2. Consolidation in Indian Telecom Tower Industry
Project aims to study
• Indian Telecom Tower Industry-
• Current status including key players and growth trajectory so far
• Growth drivers & Key bottlenecks
• Policy & Regulations related issues
• Conditions that’s driving M&A in the industry
• Market demand
• Monetizing asset (for Telecom operators)
• Sustainability of operation for some
• Growth for Tower companies- pan India presence, economy of scale, operation efficiency, management expertise,
customer acquisition/buyout
• Valuation of Tower Companies (primarily multiples method)- arriving per tower value
• Valuation of Bharti Infratel
• Viom Networks Ltd.( multiples method)
• M& A – American Tower & Viom Network

3. Prospects

4. Valuation Parameters
S.No. Parameters Bharti Infratel Viom Networks Remarks
1 No. of Towers 85892 4200
2 Lease rate/ IP Fee ( monthly rental) 69148 119047
3 Tenancy ratio 2.07 2.4
4 Potential future tenancy ratio 3 3
5 Amendment revenue (additional
space leased by anchor tenant) High Low
Bharti anchor tenant don’t pay for
additional tenancy
6 Potential for additional amendment
revenue as 3G and 4G rollout High Low
Bharti anchor tenant don’t pay for
additional tenancy
7 Desirability and uniqueness of
locations similar similar
8 Credit worthiness of tenants
High mix
Bharti Tenancy is from Airtel,
Vodafone, Idea & less from new
operators while Viom has both
9 Cancellation clauses yes no
10 Completeness of permits yes yes
11 Transferability of leases / remaining
lease duration yes yes
12 Ownership or ROFR on land under
tower yes yes
13 Operating efficiency
High relatively low
Bharti operating efficiency higher
than Viom
14 Age and performance of any
energy equipment similar Similar
15 Quality and capacity of structures and
implications for improvement capex
similar similar

5. Bharti Infratel- Valuation

6. EV of Bharti Infratel

7. Valuation of Viom Network Sept. 2015
• Revenue INR 5000 crores
• EBITDA INR 1800 crores
• PBT INR 2
• PAT INR 175 crores
• Tower ~ 42,000
• Tenancy ratio 2.4

8. EV/EBITDA Multiple

9. ATC- VIOM Deal
• ATC to expand its presence pan India from 14000 odd tower & look for growth
• Viom Network- major share holders for monetizing their assets ( TTSL & Srei group)
• ATC acquired 51% in Viom Network for cash of INR 7635 crores and also taken over debt of
~ INR 5800 crores.
• Srie Group got closed Rs. 3000 Cr, for their share relinquishing premium management
control and non-competing agreement
Equity Value of Viom = INR 14,500 Cr.
• Valuation incl. non-competing =INR 16,216 Cr.
• Debt = INR 5800 Cr.
• EV = INR 22,016 crores
• EV/EBITDA = 12.23

10. Tower Deals in India

11. References
• Tower & Infrastructure Provider Associations www.taipa.in
• Cellular operator association of India www.coai.com
• TowerXchange www.towerxchange.com
• GSMA www.Gsma.com
• Deloitte
• Yahoo finance www.in.finance.yhoo.com
• NSE & BSE
• Telecom regulator authority of India www.trai.gov.in
• Department of Telecommunications www.dot.gov.in
• KPMG
• http://www.nishithdesai.com/
• http://www.market-risk-premia.com/in.html
• Sources in Industry