By end of FY15E will have close to Rs 6,000 crore cash which is a dampener on the return ratios. Secondly, the company cannot pay IPO proceeds as dividend to shareholders? a very inefficient method of utilizing IPO proceeds. A telecom tower company with anchor tenants can be significantly leveraged to improve the return ratios and thereby improving its capital efficiency. For Bharti Infratel acquisition is the best possible option for improving the capital efficiency and growth prospects.
Viom Networks [Tata Group's + SREI Infrastructure Telecom Tower Assets] has a portfolio of 42,000 accounting for a market share of around 12%. Bharti Infratel + Indus Towers with a portfolio of around 150 thousand have a market share of around 43%. With the acquisition of Viom Networks, the combined market share will be around 55%. This presents significant industry consolidation and should result in significant increase in pricing power.
