Tatas-Srei JV may share towers with Swan Telecom, S-Tel

The joint venture between the Tatas and the Srei Group for the telecom tower business, Wireless-TT Info Services-Quippo Telecom Infrastructure, is at an advanced stage of negotiations for sharing passive infrastructure with two new operators — Swan Telecom and S-Tel. The JV currently has 22,000 towers across India and has a target of ending this fiscal with a portfolio of over 30,000 towers. According to a source tracking the development, Tata-Quippo is negotiating with both Swan and S-Tel. To begin with, Swan, where UAE’s Etisalat holds a 45% stake, requires around 15,000 tenancies across 14 circles where it intends to launch its services. Tenancies refer to slots on towers that carry telecom signals. A single tower can host up to four-five operators. New operators, who received licences in January 2008, are leasing tower infrastructure from existing players to cut down on time-to-market as well as capex requirements. “Swan’s requirements will be split equally between two tower firms, one of them being Tata-Quippo,” said the source. For S-Tel, which has Bahrain’s Batelco as an investor, negotiations are on for around 6,000 slots in six circles for which it has received start-up spectrum. The contracts are likely to be for a 20-year period, said the source. In response to a query, a Swan Telecom spokesperson said, “We are currently in the preparatory stage and will announce our plans for the Indian market at the appropriate time.” Meanwhile, Tata-Quippo has already signed an infrastructure-sharing deal with Unitech Wireless where Norway's Telenor holds a 67.25% stake. Unitech's agreement with TTSL-Quippo gives it access to 40,000 slots based on its rollout plan. “TTSL-Quippo has to provide 14,000 slots to Unitech by August this year,” another source said. Tata-Quippo has lined up a capex of Rs 3,500 crore for this fiscal, which will be jointly funded by the JV partners. It will be a mix of debt and equity funding, it is gathered. Tata-Quippo’s towers currently have an average tenancy ratio of 1.6. “The aim is to have 70,000 tenancies during this fiscal,” said a company source. This implies that Tata-Quippo is targeting more than two tenants per tower by the end of FY10. Monthly rental for towers ranges between Rs 24,000 to Rs 40,000 depending on the location and whether the tower is roof based or ground based. Apart from Unitech, Shyam-Sistema has also signed up with Tata-Quippo for 5,000 slots across India. The Tatas and Quippo announced their JV in January this year. QTIL transferred its 5,000 towers to the Tatas and also paid Rs 2,400 crore for a 49% stake in the combined entity. Tata-Quippo is the fifth-largest telecom entity in India, with the biggest being Indus Towers, a three-way JV between Airtel, Vodafone and Idea Cellular. Indus has over 91,000 towers in its portfolio.