IDFC Alternatives, the private equity arm of IDFC Ltd, is keen to acquire a controlling stake in GTL Infrastructure Ltd from the lenders of the debt-laden telecom tower operator, two people aware of the development said.
Lenders to GTL Infra are likely to auction a controlling stake in the company before mid-2017, the people said.
“IDFC Alternatives is looking for large play in the telecom infrastructure space and GTL Infra tops its list of potential acquisitions,” said the first person, who did not wish to be identified, as the talks are private.
“The PE fund is keen to only invest in assets where it can get a controlling stake and can drive growth and consolidation,” said the second person cited above.
GTL Infra owns and operates 27,000 towers across 22 telecom circles in the country.
A spokesperson for IDFC Alternatives declined to comment on the story. “It is premature to comment on the likely bidders before the SDR (strategic debt restructuring) process is complete,” a GTL spokesperson said on phone.
On 28 November, GTL Infra said in a filing to exchanges that it has constituted a committee of independent directors to monitor the implementation of its SDR scheme. The committee chaired by former Sidbi chairman and managing director N. Balasubramanian also includes former RBI deputy governor K.C. Chakrabarty, former Sebi chairman G.N. Bajpai and chief executive and managing director of Haribhakti Group Shailesh Haribhakti as special invitees.
In September, the joint lenders forum decided to invoke the SDR scheme to convert GTL Infra’s Rs3,300 crore outstanding loans into equity shares, which would translate into more than 51% stake in the company.
According to RBI guidelines, the conversion of debt to equity under SDR should happen within 210 days of the review and reference date and the induction of a new investor should take place within the next 18 months from the date.
For IDFC Alternatives, a successful bid for GTL Infra will mark its second investment in the telecom tower business. Last year, the PE fund partially sold its stake in telecom tower operator Viom Networks Ltd. American Tower Corp. acquired a 51% stake last year in Viom for Rs7,635 crore.
“GTL Infra has not been able to make a mark in the market, which I feel is largely due to its inability to commit enough resources to grow the business,” said Mahesh Uppal, founder, ComFirst consultancy.
For FY16, GTL Infra reported losses of Rs547.34 crore against total revenue of Rs631.45 crore. It had a standalone debt of close to Rs5,000 crore on its books.
India’s telecom tower companies have seen a number of large deals in the recent past, indicating consolidation in the sector. On 1 December, Mint reported that Canada's Brookfield Asset Management Inc. has emerged as the highest bidder for a 51% stake in telecom tower service provider Bharti Infratel Ltd and has begun exclusive talks with the firm’s promoters Bharti Airtel.
Brookfield has also signed an agreement with Reliance Communications Ltd in October to acquire a 51% stake in its mobile tower business for Rs11,000 crore. On 29 November, CNBC TV-18 reported that Idea Cellular has put on block its tower arm, dropping its earlier plans to sell a minority stake in the business, for close to $1 billion.
The potential acquisition of GTL Infra could mark a rare instance of a successful resolution of a stressed assets case by the SDR route. Till August, banks in India had invoked the provisions of SDR in at least 21 cases. Of these, they have closed out only two. Difficulties in finding buyers, disagreement over valuations and even the choice of merchant bankers used in the SDR process are said to be among the reasons impeding closur