There is a Potential of Listing Indus Telecom Tower Company separately on the Stock Exchanges as it could help its owners, Bharti Infratel and Idea, raise money to repay Indus’ debt, providing more cushion for spectrum renewal and upcoming auctions (like 700 MHz).
Indus is a subsidiary of Bharti Infratel (already listed), and as a consequence, there is already a market ascribed value for Indus. Bharti Infratel stock price has fallen 32% from Rs 220 (IPO price on 28 Dec-12) to Rs 150.9 (yesterday’s close), and therefore the market implied value for Indus would have also declined, making current valuations inexpensive vs. tower-cos peers. We therefore remain uncertain on the timing of such an IPO
Smaller telcos continue to selectively close operations which will impact tenancies of tower companies. However, we expect limited impact on Bharti Infratel as majority of tenancies come from top 3 telcos. We are still 18-24 months away from data picking up, which should lead to increased tenancies/more towers being set up. Currently, all telcos are curtailing their capex investments given regulatory uncertainty on spectrum renewal (for larger telcos) and cash conserving approach (by smaller telcos).
We now see minimum incremental 4G tenancies coming from RIL (the biggest 4G operator) as it has currently signed a deal for using RCOM’s towers. We also do not rule out some pressure on incremental rentals if smaller tower companies start offering lower rentals.