KKR-led consortium looking to take control of Bharti Infratel, once it has consolidated Indus Towers

Bharti Airtel and a consortium of global investment funds are working on a takeover deal for the former’s towers assets that will value the business at US$11 billion (€9.3 billion), according to Indian press reports on Wednesday.

On completion of the multi-stage deal, a group led by U.S. buyout fund KKR and comprising Canada Pension Plan Investment Board, Abu Dhabi Investment Authority and GIC Singapore will become the single largest shareholder in Bharti Infratel, which will in turn hold the majority of Indus Towers., the Economic Times reported, citing multiple unnamed sources.

The deal could be completed in the next four to six weeks, the paper said.

As it stands, Indus Towers is a joint venture between Bharti Infratel, Vodafone, and Idea Cellular; Bharti and Vodafone each hold a 42% stake, while Idea has 16% through its Aditya Birla Telecom Ltd (ABTL) subsidiary, which also counts Providence Equity Partners amongst its investors. Vodafone and Idea Cellular announced plans to create a $23.2 billion joint venture of their Indian operations in March this year, a deal which includes plans for the sale of many or all of their tower assets.

Indus Towers has a portfolio of around 123,000 telecoms towers, the paper said.

Talks between the various parties have been ongoing for around 15 months but have gathered pace in recent weeks, a source said. The deal is almost set, but Bharti Airtel and Vodafone – the latter representing Idea and Providence as well as itself – have yet to agree on a closure date.

The transaction will see Bharti Infratel acquire all or most of the shares held by its JV partners in Indus Towers, the Economic Times explained. It will pay $5.5 billion-$6.5 billion for 45%-50%. Vodafone is likely to retain a stake of 8%-10%.

Once Bharti Infratel has consolidated Indus Towers, the KKR-led consortium will increase its holding in the former to around 40%-45%, up from 10% at present. An open offer process will follow, as per Indian takeover regulations, and that will have a bearing on the group’s final shareholding, the paper’s sources said.

The consortium will have management control of Bharti Infratel, and Bharti is likely to exit at some point to deleverage its balance sheet, the sources said.