Thursday, March 18, 2010

"Quippo-WTTIL Acquires Tower Business of Tata Teleservices(Maharashtra) Ltd."

It will sell its 2,535 telecom towers to WTTIL that would bring cash inflow of Rs 900 crore.

Tata Teleservices Maharashtra (TTML), the listed arm of telecom services operator Tata Teleservices, is selling its telecom towers for an enterprise value of Rs 1,318 crore to Wireless-TT Info Services (WTTIL).
WTTIL is the joint venture between Tata Tele and Srei group’s Quippo where the Tata group’s privately held telecom business owns 51% stake.
TTML currently operates services in Mumbai, Maharashtra and Goa circles and, as per the deal, will sell its 2,535 telecom towers, being run by its subsidiary 21st Century Infra Tele, to WTTIL that would bring cash inflow of Rs 900 crore.
This transaction values the towers at Rs 52 lakh per unit, around 10% more than the Rs 48 lakh per tower paid by GTL Infrastructure for acquiring Aircel Cellular’s towers earlier this year. As part of this deal, WTTIL has also received a commitment from 21st Century Tele of around 4,000 towers to be rolled out over five years in Mumbai, Maharashtra and Goa.
WTTIL that was formed last year through a merger of the telecom tower operations of Tata Teleservices — in which Japan’s NTT DoCoMo holds 26% — and Quippo, will now have over 38,000 towers. At the same tower valuation, WTTIL would be worth Rs 19,760 crore or $ 4.4 billion. In January 2009, the combined entity had about 18,000 towers, which gave it an enterprise value of Rs 13,000 crore ($2.82 billion).
The transaction will give strategic advantage to WTTIL with lucrative towers network in Mumbai, Maharashtra and Goa. In a statement, the company said, "this transaction will also bring immense benefit to Tata-Quippo with the 3G and WiMax auctions to be conducted shortly and hence the additional requirements for towers in these strategically important geographies."
Although TTML has not stated what it will do with the cash infusion, the money will allow it to get ready to bid for 3G spectrum allowing the firm to offer next generation mobile services.
The acquisition of TFCITL will give QUIPPO-WTTIL a strong countrywide footprint by strengthening its presence in the new geographies. Mumbai being a metro is one of the most attractive circles, where site acquisition is difficult & therefore inorganic strategy will help the company in gaining a ready presence in this market. This transaction will also bring immense benefit to QUIPPO-WTTIL with the 3G and WiMax auctions to be conducted shortly and hence the additional requirements for towers in these strategically important geographies, especially Mumbai. The deal will help QUIPPO-WTTIL leverage the combined network strength and capture new customers, thereby enhancing the tenancy further.

Announcing the deal, Sunil Kanoria, Director, QUIPPO-WTTIL said, “With a modest beginning in 2005, and subsequent to our partnership with Tata Teleservices last year, today we are the world’s largest independent telecom infrastructure company. It has been an extremely exciting and gratifying journey within a short duration. The acquisition complements our tower portfolio in the strategically important markets, at the same time providing us a contiguous network nationally. The proposed transaction will result in a renewed robust organisation with enhanced product profile in new geographies, economies of scale with numerous cost benefits due to operational synergies and a stronger financial position, thereby resulting in greater shareholder value”.
As part of this deal, QUIPPO-WTTIL has also received a confirmed commitment of approx. 4000 towers roll-out over a period of five years from TFCITL in Mumbai, Maharashtra and Goa. The deal takes the partnership of Quippo with Tata Teleservices, which began last year, to the next level. This is a classic example of the endeavour of two like-minded partners coming together to create an independent world-class telecom infrastructure company.
Speaking on the occasion, Dr. Mukund Govind Rajan, Managing Director, Tata Teleservices (Maharashtra) Ltd. (TTML), said, “We are delighted with the recognition of the value that TTML has created in TFCITL. Going forward, this transaction allows us to focus on our core business priorities of strengthening our market leadership in the voice and data segments. The cash inflow from this transaction in excess of Rs 900 Crores will support our ambitious investment and growth plans”.


  1. Dear Rajeev,

    Does that mean SREI will get a major advantage in its business ? Though you have already mentioned you are already BULLISH about SREI, especially now that it is eligible to get a banking licence as per the latest budget. Regards.


  2. Any View on State trading corporation or IFCI

  3. TT, I have already given view on not track STC

  4. Dear Rajeev,

    Found another article on pipeline infrastructure that came in Economic Times today. Just posting for your referance. Ofcourse i have tried to do as mush research on PSL as possible while seeing the stock stuck at 145 for the last nine months. LOL.
    As you once said stock market is a great leveller. After my spectacular returns in madhucon , sujana and Om, my biggest bet to date is showig no signs of movement. But I would like to add a caveat that PSL is my five year bet and hence i am only adding more and more with passage of time.

    Mega expansion of gas pipelines likely

    Our Bureau NEW DELHI

    THE oil ministry is targeting a natural gas pipeline networks to 40-50 km per thousand sq km from the current 3.29 kilometre per thousand square km,minister of state for petroleum & natural gas Jitin Prasada said.

    Gas transport infrastructure is a must to meet energy needs of our economy, he said at a function organised by Indraprastha Gas (IGL).India,which imports over 80% of its energy requirements,needs affordable and clean fuel if it wants to maintain about 8-9 % growth in the next decade.

    India has natural gas resources but it could not be utilised properly in want of pipeline infrastructure.The government is planning to set up a national gas highway authority to develop pipeline infrastructure in the country, an oil ministry official said.India cant sustain mounting crude oil import bill which was about Rs 3,45,815 crore in 2008-09.There is a need to augment gas supply which is also environmentally friendly, he said requesting anonymity.
    As per directorate general of hydrocarbon (DGH),an oil ministrys arm which manages oil & gas assets in the country,countrys gas production is expected at around 44 billion cubic meter (BCM) per annum by 2011-12 and 54 BCM by 2014-15 from current level of 8 BCM per annum.The 2002 gas find by RIL in the D6 block of Krishna-Godavari (KG) basin,one of the largest gas discoveries,has already started fuelling the economy.

  5. Dear Rajeev

    You have posted an article on stone india. Are you recommenting stone india as an investment bet.

    Please reply
    Vishnu R Nair

  6. Hi Rajeev,

    Came across this peice of News Govt plannaing to set $ 1Tn in 12th plan for Infrastructural projects.

    Even post Union Budget we havent seen any great momentum in leading Infra stocks other than few exceptions like Lanco Infra. Even Engineering, Power stocks are moving at snails pace. much of rally is in Metal stocks, how do you find much of Infrastructure space for long term, which companies are attractive?

    With Regds-

  7. Vijay,
    Infra is a LT play...moreover interest of operators plays important role in moving the stocks.....

  8. Yes Mitzzzz I feel the same way..PSL is going to be the next big investment opportunity. And as susal Rajeev's reco always shows hidden potentail.

    I am holding Sujana,Om and PSL too since fallen era (when Rajeev was only bullish and so Mitzz was) and will keep on holding for long.
    Rajeev I would like to have your views on Sujana with it's latest news of Sujana group scam.
    And Mitzz your views on Om.

    Note: There is one more commenter with name "OM" so please don't confuse..i will suffix my self with extra "s".

    Thanks u guys,

  9. Rajeev,

    How about Tata Teleservices which is almost close to its 52 week low price? Will it benefit out of towers sale in coming future? What is your take on TTML future?


  10. Vijay,
    What u r asking is wrong way to look....TTML is a good co with great management.With selling of tower business for 900 cr TTML will become cash reach but then try to look at the earnings?They were never great and was always in loss...while Bharti and Rcom is making it is useless to think about TTML even though it is at 52 week low.....
    We need to see the growth...and I use to put ample stocks which will show you that..I am not saying TTML will not give return in future but it is the wrong way of looking the stock...that's all I will say....

  11. Dear OM's

    Yeah I am certain of PSL's performance in the long run. Its just that sumtimes it becomes a bit frustarting to see all stocks in a sector move up by leaps and bounds except for the one that you are holding.
    Jin saw moved frm 130 to more than 1000, wels guj from 40 to 280, man ind and bihar tubes too moved up brilliantly.

    I guess its just a matter of time. Maybe accumulation by big guys is not over yet. Share holding of march qtr wil reflect how much more reliance and others have added.

    One positive thing bout the management is that maybe now they have realised that they need to be a lil bit investor friendly.
    They posted the consolidated numbers for the first time for any qtr in december . All this while they were posting consol nos only in the annnual results.

    Maybe Mr G Gehani finally understood as to why i was asking him to announce consol nos on a qtrly basis like its peers. (if you recall i had spoken to Mr Gehani, the co sec and one of the directors of PSL, for more than half an hour a few months back)

    one more positive new was in Business Line today where Relaince an Gail were directed by the petroleum ministry to speed track the pipeline to south india and to complete it by 2012.

    GAIL should come out with big orders shortly once the PNGRB case is settled and my guess is that PSL should be able to get a major share of these orders.

    Coming to Om metals. The managemnt has gone on record stating their T.P and N.P picture for the next two to three years. If what they say comes true then Om will definately go above Rs 150 -200 in the next two years.

    And remember 75% of the equity is held by promoters. So anything can happen once operators take hold of it. I can alread see that happening.

    Dec qtr reflects entry of madhukar sheth and birendra kumar agarwal. Just google their names to get an idea of what i am talking about.

  12. Dear OM's

    The prom holding in Om Metals is 69.61% and not 75%. Sorry for the mistake in my previous post.

  13. Has any one calculated Quippo share value? Equipment Rental+Telecom+Infra.

  14. Ravi,
    I think you must come out with the valuation...I know it is write here what is the valuation...

  15. Dear Rajeev and Friends,

    Here is the Maths (Ratio and Fair Value calculation please correct if you have a basis of different calc)

    a) Quippo SREI share swap ratio of 3:2 meaning Quippo will get 3 shares of SREI On Amalgamation

    b)SREI Infra Shareholders to get 4:5 Bonus before the point a. Amalgamation

    Therefore SREI share price is value 85 (Avg Price) when the document was filed for approval keeping in view the 4:5 bonus offer value of SREI has been arrived at 115. But right now Market is giving a value of 70 so add theory value of bonus should give around 90 So 3 shares of SREI for 2 shares of Quippo so you are giving 90+90+90 = 270 bucks for every 2 shares of Quippo means 2 shares of Quippo = 270.
    So 1 share of Quippo = 135 (with fallen value of SREI)

    Quippo Business overview some of these are developing into major business

    Quippo Telecom and Infra
    Expected revenues of ~Rs 16,520 mn and projected EBITDA of ~ Rs 9000 mn by March 2010 (Including the recent aquisition of TTML Tower)

    Quippo Contruction Equipment:
    In Mn
    Asset Base:3390

    Quippo Energy Pvt Ltd:
    Asset Base:830

    Quippo Oil and Gas

    Asset Base:900

    GoIndustry Quippo Valuers & Auctioneers Pvt Ltd (GQVAPL)
    Is a 50:50 joint venture with GoIndustry (UK), Ltd.
    The JV has an equity base of INR 2 mn and is a fee based business with an expected Revenue of INR 32 mn by
    March 2010.

    Mumbai Futuristic Economic Zone Pvt. Ltd. (MFEZPL)–
    It currently owns (approx) 200 acres of SEZ land which is located on Alibaug-Mumbai Road.
    To be Developed by 2011

  16. Ravi,
    That is excellent but u came on the value of Quippo on merger basis....what is the actual value for Quippo itself..with all those arms viz: Telecom Tower,Construction Eq,Quippo Energy,Quippo Gas and Oil,GoIndustry Quippo Valuers&Auctiners and MFEZPL.....this is what I am other would like to know...what value one can put on what Quippo is already holding?I would like to know what can be the fair price per share for Quippo alone with all these arms...what the CA will put it like...Like say...Rakesh is a Chartered Accountant and what he will put the share value of Quippo?

  17. It should be put around 300-370 per share only concern is Debt is quite active but that is offset with growth shown, Since Quippo has other business under Quippo Construction they have L&T+Quippo Sub, under Quippo Oil & Gas they have 2 Oil Fields, MFEZPL Land Value in and around Mumbai after construction is over for SEZ would have a futuristic value.

    Oil & Gas has two more subs 1. Maritime in singapore and 2. Quippo Prakash Singapore.

    Quippo Construction has a sub with L&T named NAC Infrastructure

    Quippo is a Costly Kid. Just on Amalgamation and 1 year down the line i am getting mad valuations

    Here the idea is different.

    Amalgamate...make the entity hugely stronger...develop business much more strongly after they have become really difficult to manage under a single entity in the next 5 years.

    Then Demerge each business (they have around 6 main subs and another 4 subs under these 6 subs) and list these business in capital market.

    So each share holder will get

    Take this example of you holding 1000 shares of SREI

    a. 4:5 bonus = Total holding now at 1,800 shares

    b. In the 5 years SREI will demerger 6 business again.

    Issue shares for 1,800 shares you are holding as per above example.

    Eventually in portfolio in the next 5-6 years you will get 6 subs shares free of cost which would be listed again in market.

    assuming 1:1 shares in demerger

    1,800 Quippo Telecom
    1,800 Quippo Energy
    1,800 Quippo Oil & Gas
    1,800 Quippo Construction
    1,800 Quippo Valuers
    1,800 Quippo-MFEZPL

    This is what SREI can do in the next 5-6 years

    So a 70,000 Investment can be anything (i don't want to attach a value)

    Ravi FCA

  18. Dear Ravi,

    Excellent analysis. Looks like the markets have taken note of it with srei infra rising on huge volumes today.

    BTW Rajeev I guess i shudnt be asking you this but do you see any particular reason why PSL is under performing so much and why it is falling every day ??

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  20. Thanks a lot, By the way the above valuation has not taken into account

    a. DPSC
    b. Banking License (Just think what SREI can do)

    So this should give a Jerk to the valuation
    Remember Mcdowells used to be around 68 for many weeks, I was told of a major restructuring in mcdowells while it was at 68, went to 65 and then after Market Men knew of the same took it to 120 in 3-5 days (20% circuit it was) after that FII's, Retail and Market Madness made it 1,800 bucks per share and after that many stories occured in it

    Usually during any major business decisions it can be two way if the management has a strong vision/Business Model along with cartel of great operators It can be even a 50X-100 X multibagger

    SREI is in this league wouldn't be suprised if it makes major moves as SREI would be a MONOPOLY
    Market gives best valuations always for MONOPOLY Business stories

    a. DCHL (when it was at 140 several years back)-Only English newspaper-India in the listed place became 25X
    c. Coca Cola (In U.S) became 1000X
    d. Apollo Hospitals-Monopoly in large hospital network listed- became 15X Now Forties came into place
    e. RIL-MONOPOLY-India (you know this)
    f. McDowells-Monopoly-Listed Brand with Several soild business with it-40X

    Like wise they are many many but just listed few

    In that list SREI will join-MONOPOLY-Infra+Finance+Rental Business+SEZ+Banking

    Who has this model in India?-Pure Monopoly Play

    Need to write a paper on Monopoly and Market Valuations