Tata, Kolkata firm form new telecom infrastructure company

New Delhi, Jan 5: Tata Teleservices, the country's leading CDMA telecom services provider, and Kolkata-based Quippo Telecom Infrastructure Monday announced the merger of their infrastructure businesses to create an independent telecom infrastructure company.

Under the terms of the partnership, the Tata group firm and Quippo will swap 51 percent and 49 percent stake respectively in the infrastructure business held by them.

The management rights in Wireless Tata Telecom Infrastructure (WTTIL), the tower arm of Tata Teleservices, shall now move over to an independent professional management run by Quippo.

The Kolkata firm will also make an upfront cash payment of approximately Rs.2,400 crore (Rs.24 billion) and transfer its passive telecom tower portfolio of approximately 5,000 towers to WTTIL. The combined entity will therefore have a portfolio of 18,000 towers, with an enterprise valuation of approximately Rs.13,000 crore (USD 2.6 billion).

"The combined entity will reap the benefits of significant synergies through combining of portfolios - both at the operational and financial levels. This will further increase scale and reach while ensuring better asset utilisation, and upside in tenancy and reduction in capital expenditure," Tata Teleservices managing director Anil Sardana told reporters here.

The company plans to set up 50,000 towers by 2012.

“We will invest up to Rs.2,000 crore (Rs.20 billion) in 2009-10 for setting up approximately 10,000 towers initially and will then take it up to about 30,000-35,000 towers with an investment of Rs.4,000-5,000 crore (Rs.40-50 billion),” Quippo vice-chairman and managing director Sunil Kanoria said.

The independent tower company is also in talks with telecom operators like Swan Telecom, Unitech Wireless and Datacom Solutions for infrastructure sharing.

At the same time, Tata Tele also plans to introduce GSM services in the country by the end of this year. The company has been allotted spectrum for almost 13 circles for the same.

“We will invest USD 2 billion for the pan-India rollout of GSM services,” Sardana said.

The investment is being made for approximately 60 million subscribers, he added.