American Tower close to Tata Tele unit stake

American Tower Company (ATC) is believed to be the frontrunner among the bidders for investing in the tower firm of Tata Teleservices. Boston-headquartered ATC is a publicly-held company owning and operating over 23,000 sites in the US, Mexico and Brazil. According to sources, Tata Teleservices and ATC are in talks over the valuation of the tower entity of the telco.

Recently, Tata Teleservices managing director Anil Sardana had said that the task of divesting stake in its tower company would be concluded by the end of May. Tata Tele wants to divest anything between 26% and 49%. According to the company, around 15 strategic investors were shortlisted for picking up a stake in the hived-off tower entity of Tata Tele. At present, Tata Teleservices Ltd (TTSL) has 10,000 towers, and Tata Teleservices Maharashtra Ltd (TTML) 3,500 towers.

The equity dilution model works very well in the tower business as this is a capital-intensive business. While financial investors offer capital for the infrastructure needed in the business, strategic investors can help in the actual operation of tower companies.