Telecom tower company Viom Networks, a joint venture of the Tata Group and Kolkata-based Srei Group, has appointed Credit Suisse and Citigroup to advise it on raising about Rs 1,500 crore (Rs 15 billion) of growth capital through listing on a foreign bourse.
According to sources, while the firm is most likely to list its shares on the London Stock Exchange (LSE), it is also considering the New York Stock Exchange (NYSE) and the Singapore Stock Exchange. The listing is expected over the next three to six months.
Gurgaon-based Viom will be the first Indian telecom tower company to go for listing abroad. It has yet to finalise the amount of equity it will dilute through the initial public offering (IPO). According to market sources, both Tata Tele and Srei Group might look at reducing their holding in Viom.
At present, Tata Tele has a 54 per cent stake in the JV, while Srei Group holds 18.5 per cent. The remaining 27.5 per cent is owned by a group of financial investors, including IDFC Private Equity, SBI Macquarie, Oman Investment Fund and GIC of Singapore.
When contacted, a spokesperson for Viom Networks said: “Though we don’t comment on speculation, we can confirm that Viom Networks and its shareholders have engaged international financial advisors to explore options for raising growth capital.”
Credit Suisse and Citi did not respond to queries from Business Standard.
The Viom spokesperson added: “The development has come at a time when the Indian telecom industry is getting back on the growth track, driven by an improved operating environment. To capitalise on the next phase of telecom revolution, Viom and its financial advisors will evaluate appropriate avenues to raise primary growth capital, in due course.”
With 42,000 towers, Viom claims to be the country’s largest independent telecom tower company. Its tenancy ratio, at 2.3 times, is higher than the industry average. In comparison, the listed Bharti Infratel, which has a little more than 35,000 towers and a market capitalisation of Rs 33,498 crore (Rs 334.98 billion), has a tenancy ratio of 1.8 times.
Viom is looking at fresh funding to support its entry into Myanmar, besides expanding its pan-Indian tower network.The company also plans to explore tower management opportunities in Indonesia and Bangladesh.
Over the next two-three years, the company aims to add about 15,000 towers in India.
And, Viom Networks CEO Sayed Safai had earlier told Business Standard that about 30,000-40,000 towers might be added to the company's India network by way of cashless mergers.
"Over next five years, we would need to invest to the tune of Rs 3,500-4,000 crore ( Rs 35-40 billion) on new builds. Overall, we would need about Rs 5,000 crore (Rs 50 billion) of capex over the next six years. We need to raise capital for accelerated growth," Safawi had added. Over the past two years, the company has reduced its debt by about 15 per cent. At present, its long-term debt stands at about Rs 6,500 crore (Rs 65 billion). Viom Networks had an Ebitda (earnings before interest, tax, depreciation and amortisation) of about Rs 1,900 crore (Rs 19 billion) in 2012-13. The company turned positive on profit after tax in the second half the current financial year.
In 2011-12, it had clocked a loss of around Rs 325 crore ( Rs 3.25 billion). According to the company's latest full-year results, its PAT stands at about Rs 80 crore ( Rs .80 billion) on a revenue of Rs 5,000 crore ( Rs 50 billion). Analysts say the overseas listing is likely to ensure better valuation for Viom. While in India valuation was repressed at around five to six times tower companies' Ebitda, it was about 15-17 times in foreign markets, said an analyst with an equity research firm.
42,000: Total number of towers owned by Viom Networks
Viom’s financial performance as of 2012-13
Revenue: Rs 5,000 crore (Rs 50 billion)
Profit after tax: Rs 80 crore ( Rs .80 billiion)
Debt: Around Rs 6,500 crore ( Rs 65 billion)
Ebitda*: Rs 1,900 crore ( Rs 19 billion)