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Divests 3500 African towers to Eaton Towers
Bharti Airtel has announced that the company has entered into an
agreement with Eaton Towers for divestment of its 3500 African tower
assets for an undisclosed sum. The deal is a sell and lease back
arrangement between the two companies with a time frame of about 10
years. This deal is the second after the 3100-tower deal to Helios Towers,
Africa, which was also concluded in July. The deal value, as per media
sources, was about | 2400 crore ($ 400 million).
Airtel had about 15,000 towers across 17 continents in Africa, which it
plans to divest. Deals for about 6600 towers have materialised so far. We
may see further deals for the remaining 8400 towers, going ahead.
Though Airtel will have to incur an additional operating expenditure for
tower rentals it will save considerably on depreciation and interest.
However, the entire tower portfolio could fetch Airtel | 15000-18000 crore
($2.5-3 billion) the proceeds of which could be used for its debt reduction
which stands at hefty levels of | 64688.5 crore (net debt as of FY14). This
can lead to significant yearly interest cost savings to the tune of | 990-
1188 crore. We will, however, factor this in our estimates once clarity on
the deal valuations is available.
We maintain our BUY recommendation on Bharti Airtel. We value it using
the DCF methodology and arrive at a target price of | 480.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
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Divests 3500 African towers to Eaton Towers
Bharti Airtel has announced that the company has entered into an
agreement with Eaton Towers for divestment of its 3500 African tower
assets for an undisclosed sum. The deal is a sell and lease back
arrangement between the two companies with a time frame of about 10
years. This deal is the second after the 3100-tower deal to Helios Towers,
Africa, which was also concluded in July. The deal value, as per media
sources, was about | 2400 crore ($ 400 million).
Airtel had about 15,000 towers across 17 continents in Africa, which it
plans to divest. Deals for about 6600 towers have materialised so far. We
may see further deals for the remaining 8400 towers, going ahead.
Though Airtel will have to incur an additional operating expenditure for
tower rentals it will save considerably on depreciation and interest.
However, the entire tower portfolio could fetch Airtel | 15000-18000 crore
($2.5-3 billion) the proceeds of which could be used for its debt reduction
which stands at hefty levels of | 64688.5 crore (net debt as of FY14). This
can lead to significant yearly interest cost savings to the tune of | 990-
1188 crore. We will, however, factor this in our estimates once clarity on
the deal valuations is available.
We maintain our BUY recommendation on Bharti Airtel. We value it using
the DCF methodology and arrive at a target price of | 480.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
LINK
http://content.icicidirect.com/mailimages/IDirect_BhartiAirtel_QC_Sept2014.pdf
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