Tata Teleservices Maharashtra Ltd (TTML)

Tata Teleservices Maharashtra Ltd (TTML)
(updated 21 Mar 2010)

While the move is positive, considering the tower deals done in this space, TTML’s tower assets could have possibly fetched more

Tata Teleservices Maharashtra’s (TTML) move to sell its 100per cent stake in tower infrastructure subsidiary, 21st Century Infra Tele, to Quippo-WTTIL was given a thumbs up by the Street. The scrip gained 4.67 per cent to Rs 24.65 on Thursday. Since its parent, Tata Teleservices, already has a passive infrastructure (tower and related assets) joint venture with Quippo named Quippo-WTTIL, the move isn’t surprising. The valuations, however, appear to be a tad lower.

Consider this: TTML has 2,535 towers in Mumbai, Maharashtra and Goa circles, which it is selling for Rs 1,318 crore - Rs 52 lakh per tower - wherein each tower has an average 2.15 tenants. In mid-January 2010, GTL Infrastructure acquired 17,500 towers from Aircel for Rs 8,400 crore - Rs 48 lakh per tower - wherein each tower had just 1.2 tenants. Since the profitability of the tower infrastructure business is strongly influenced by the tenancy ratio, a higher ratio would typically attract better valuations, say analysts.

That apart, in January 2009, Tata Teleservices had merged its 13,000-tower infrastructure with Quippo to form an 18,000-tower infrastructure company (QuippoWTTIL) with an enterprise value of Rs 13,000 crore - Rs 72.22 lakh per tower. Then also, market sentiments were far from good. The deal valuations, however, are not starkly different from the American Tower-Essar Telecom deal announced last month. The former acquired 4,450 towers for Rs 2,000 crore (Rs 45 lakh per tower; tenancy ratio of 1.8).

On the positive side, TTML’s coffers will be richer by Rs 900 crore, which it can use for improving its position in core voice and data business, or bid for 3G licence, which could cost over Rs 300-400 crore, given the prime circles it operates in.

Meanwhile, strong subscriber additions have helped TTML post a 4 per cent yearon-year growth in revenues to Rs 1,516 crore for nine months to December 2009. But, stiff competition and subscriber acquisition costs have seen margins fall sharply and net loss jump 82 per cent to Rs 123.6 crore.

Disclaimer: Information presented on this site is a guide only. It may not necessarily be correct and is not intended to be taken as financial advice nor has it been prepared with regard to the individual investment needs and objectives or financial situation of any particular person. Stock quotes are believed to be accurate and correctly dated, but www.daytradingshares.com does not warrant or guarantee their accuracy or date.
www.daytradingshares.com takes no responsibility for any investment decisions based on recommendations provided on website.
Financial contents like Technical charts, historical charts and quotes are taken from NSE and Yahoo sites.
Note - All quotes are delayed by 15 minutes and unless specified.
Please read at www.daytradingshares.com/disclaimer.php before using any material or advice given at www.daytradingshares.com
Copyright © 2010 DayTradingShares.com. All Rights Reserved