Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Vodafone-Essar settlement; positive step towards pot. Indus IPO?
Settlement may lead to faster decision on tower stake sale
As per media articles/company statement, Vodafone is taking full control of
its Indian JV by buying out its local partner Essar Group, paying US$5.46
bn (higher than announced US$5 bn, but factors in tax). Although
Vodafone may have other issues to focus on like conclusion/hearing of a
dispute over tax on the Vodafone/Hutch transaction and complying with
local FDI rules, we believe the settlement is a positive step towards a
potential IPO of Indus towers. We note that in recent conference calls both
Bharti and Idea mentioned a potential IPO of Indus (no timeline stated).
One positive step, but other issues need to be addressed
In our view, any decision on an Indus IPO/tower stake sale with Essar as
part of VOD-Essar (vs. Vodafone only) may take more time, due to potential
complicated negotiations between the parties on various factors like timing
or valuation. We expect visibility on other matters like the demerger of
towers from Vodafone (pending clarity on several issues like an update
from the Gujarat courts) in coming months which would help Vodafone
make further progress on any demerger. We believe that Bharti/Idea have
demerged their towers into separate companies and are likely awaiting
clarity from Vodafone before merging their towers into Indus. Furthermore,
continued improvement in Indus KPIs would likely lead to better
valuations.
Improving Indus asset base: adding Vod/Idea towers before IPO?
Vodafone and Idea have c.7,000 and c.9,000 towers (GS est.) in the nonIndus circles. In our view, articles like ‘Vodafone may sell extra towers to
Bharti Indus’ (Teletimes Int, Feb 3) and ‘Idea looks at tower business
monetization’ (WSJ, June 28) indicate that Vodafone and Idea may
potentially consider hiving off these towers (timing unknown) to reduce
gearing on their balance sheets. As indicated in some of the articles, we do
not rule out these towers being transferred to Indus, as Idea/Vodafone’s
comfort level is high and execution risks are lower with these towers
transferred to Indus rather than other companies (given scale advantage).
However, ownership of Indus (between its partners) may change in such a
scenario. We believe any potential IPO of Indus could help Bharti/Idea
reduce gearing. We value Indus (not listed) at EV of US$12.1 bn, implying
FY12 EV/tower of US$111k. Reit. Buys on Bharti (CL) and Idea.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Vodafone-Essar settlement; positive step towards pot. Indus IPO?
Settlement may lead to faster decision on tower stake sale
As per media articles/company statement, Vodafone is taking full control of
its Indian JV by buying out its local partner Essar Group, paying US$5.46
bn (higher than announced US$5 bn, but factors in tax). Although
Vodafone may have other issues to focus on like conclusion/hearing of a
dispute over tax on the Vodafone/Hutch transaction and complying with
local FDI rules, we believe the settlement is a positive step towards a
potential IPO of Indus towers. We note that in recent conference calls both
Bharti and Idea mentioned a potential IPO of Indus (no timeline stated).
One positive step, but other issues need to be addressed
In our view, any decision on an Indus IPO/tower stake sale with Essar as
part of VOD-Essar (vs. Vodafone only) may take more time, due to potential
complicated negotiations between the parties on various factors like timing
or valuation. We expect visibility on other matters like the demerger of
towers from Vodafone (pending clarity on several issues like an update
from the Gujarat courts) in coming months which would help Vodafone
make further progress on any demerger. We believe that Bharti/Idea have
demerged their towers into separate companies and are likely awaiting
clarity from Vodafone before merging their towers into Indus. Furthermore,
continued improvement in Indus KPIs would likely lead to better
valuations.
Improving Indus asset base: adding Vod/Idea towers before IPO?
Vodafone and Idea have c.7,000 and c.9,000 towers (GS est.) in the nonIndus circles. In our view, articles like ‘Vodafone may sell extra towers to
Bharti Indus’ (Teletimes Int, Feb 3) and ‘Idea looks at tower business
monetization’ (WSJ, June 28) indicate that Vodafone and Idea may
potentially consider hiving off these towers (timing unknown) to reduce
gearing on their balance sheets. As indicated in some of the articles, we do
not rule out these towers being transferred to Indus, as Idea/Vodafone’s
comfort level is high and execution risks are lower with these towers
transferred to Indus rather than other companies (given scale advantage).
However, ownership of Indus (between its partners) may change in such a
scenario. We believe any potential IPO of Indus could help Bharti/Idea
reduce gearing. We value Indus (not listed) at EV of US$12.1 bn, implying
FY12 EV/tower of US$111k. Reit. Buys on Bharti (CL) and Idea.
No comments:
Post a Comment