(From left) Tata Teleservices MD Anil Sardana, Hemant Kanoria, chairman of Srei Infrastructure Finance, and Sunil Kanoria, director of Quippo Telecom Infrastructure, in New Delhi on Monday. Picture by Rajesh Kumar

New Delhi, Jan. 5: CDMA firm Tata Teleservices today merged its tower arm with Calcutta-based Quippo Telecom Infrastructure.

Under the terms of the deal, the Tatas will keep 51 per cent in Wireless Tata Telecom Infrastructure, while Quippo of the Srei group will take a 49 per cent stake.

Quippo will pay Rs 2,400 crore in cash to the Tatas for a 30 per cent stake in Wireless Tata. It will transfer 5,000 towers to Wireless Tata for the remaining 19 per cent stake. Quippo will also have management control. The joint venture will have around 18,000 towers and a market valuation of Rs 13,000 crore. The deal is expected to close by June 2009.

Competitors to the entity include Indus Towers — a collaboration among Bharti Airtel, Vodafone Essar and Idea Cellular — Bharti Infratel and Reliance Infratel.

Indus has over 84,000 towers, Bharti Infratel about 27,000 and Reliance Infratel over 46,000. “We plan to expand our footprint to 50,000 towers in the next two years. Moreover, the tower sharing ratio, which is currently above 1.5, will grow to 2 by 2011 creating tremendous enterprise value,” said Anil Sardana, managing director of Tata Teleservices Ltd.

Analysts said this could be the first in a series of similar alliances leading to a further consolidation in the business.

Consolidations are likely because the smaller players may not survive as they are unable to have a presence across the country.

“Consolidation gives the benefits of scale. Tower players must have a large portfolio of towers for sharing to be able to continue in the business,” the analysts said.