Joji Thomas Philip

NEW DELHI

THE merger of Quippo Telecom Infrastructure (QTIL) and Wireless Tata Telecom Infrastructure (WTTI), the tower arm of telecom major Tata Teleservices, was completed on Tuesday along the terms set in January’09. The only minor change is that Quippo will now pay Rs 33 crore less than the announced 2,400 crore.

“There is no change in the deal structure. We will make an up front cash payment of Rs 2,367 crore and transfer all our towers to the Tatas tower company. Wireless Tata Telecom Infrastructure (WTTI). In exchange, we will get 49% stake and management control of the merged entity. Quippo’s vice-chairman and managing director Sunil Kanoria told ET. The boards of both companies – Quippo and WTTI. met in Mumbai on Tuesday to complete the transaction.

 QTIL is the telecom tower subsidiary of SREI Infrastructure Finance Ltd. Quippo had about 5,000 towers when both companies had announced the merger earlier while the WTTI had 13,000 units. Tower companies hold the physical infrastructure which carry cellular traffic.

Both SREI Infrastructure & the Tatas are looking at listing the combined entity   although executives in the company did not set a timeframe to it.

Mr Kanoria also added that Quippo had raised part of 2,367 crore to fund the deal from IDFC Private Equity and Oman Investment Fund while adding that the remaining amount had come from mezzanine capital and debt. While he did not reveal additional details, it is learnt that Quippo has raised about Rs 900 crore by issuing fresh equity and selling shares in the secondary market where all of QTIL’s main shareholders - IDFC Private Equity. Oman Investment Fund (OIF) and SREI Infrastructure Finance subscribed to additional shares in the company.

According to executives aware of the development, of the Rs 900 crore the company raised from its shareholders, IDFC Private Equity contributed about Rs 250 crore by subscribing to additional shares with OIF and SREI Infrastructure Finance investing the remaining amount.

Both the Tatas and QTIL have also finalised the management structure of the merged entity.

“The Tatas will have five representatives on the board as they have a 51% stake, while we will have four. In addition, we will also have four. In addition, we will also get to nominate an independent chairman to the 10-member board,” Mr Kanoria added.

At present IDFC Private Equity holds 11.24% stake in QTIL, while OIF has 16.60% and SREI has a 55%. The Government of Singapore Investment Corp. (GIC) is also a shareholder in QTIL.

As per the January ’09 announcement, the combined entity would have over 18,000 towers with an enterprise valuation of about Rs 13,000 crore ($2.6 billion).The total deal size was Rs 6,350 crore ($ 1.27 billion) implying that Quippo’s 5,000 towers were valued Rs 3,900 crore.

The eight month delay in closing the transaction had led to intense speculation in the industry and also among analysts who said that deal had run into trouble due to due to funding constrains.

Speculation was also doing the rounds that Quippo wanted to lower the upfront cash payment although both companies had repeatedly denied that deal was facing funding constraints.

Over the last couple of months, the Tata-Quippo merged entity has bagged two major tower sharing details. These include a deal from Unitech Wireless.