Temasek, Crown Castle may buy into Tata cell tower unit

Singapore-based Temasek Holding and the world's second-largest tower business company, Crown Castle International, are understood to be in talks with Tata Teleservices to buy close to a 15 per cent stake in its to-be-hived-off cellular tower business.

Taking a cue from Reliance and Bharti, Tata Teleservices has announced that it will hive off the tower business as a separate subsidiary. "Towers are passive infrastructure. We are actively discussing with various companies on having them take over the business," Tata Teleservices CEO Darryl Green said. A Tata group spokesperson declined to comment on the issue.

While Green admitted that the company had held discussions with around six global firms, investment-banking sources said negotiations with Temasek and Crown Castle were at an advanced stage.

Temasek is a long-term partner of Tata Teleservices. The Singapore-based fund had bought a 10 per cent stake in Tata Teleservices in March 2006 for Rs 1,500 crore. Crown Castle is the world?s second-largest tower and passive infrastructure company and is keen on entering the Indian market.

The Tatas have appointed Morgan Stanley as advisers for spinning off the tower business. Tata Teleservices has close to 5,000 towers, in which it has invested close to Rs 1,000 crore.

Analysts said with the participation of Temasek or Crown Castle, the valuation of Tata Teleservices tower subsidiary might fetch up to $1 billion. American Towers and private equity players like Blackstone and Kohlberg Kravis Roberts are in the race for picking up stakes in the tower subsidiaries of Reliance and Bharti.

Indian telecom companies are hiving off their tower businesses to reduce their additional infrastructure investment.

A recent consultation paper by the telecom regulator says passive infrastructure contributes to 60 per cent of the total cost of networks and active electronics 40 per cent.