Bharti, Idea, Vodafone Essar to form independent tower company

Bharti Infratel Ltd, a subsidiary of Bharti Airtel Ltd, Idea Cellular Ltd and Vodafone Essar Ltd have agreed to form an independent tower company, Indus Towers Ltd, to provide passive infrastructure services in India to all operators. This follows the infrastructure sharing memorandum signed between Bharti and Vodafone in February 2007.

The three companies will each merge their existing passive infrastructure assets in 16 telecom circles in India. Bharti and Vodafone Essar will own approximately 42 per cent each and Idea will own the remaining 16 per cent stake in Indus Towers. New passive infrastructure rollouts in the 16 circles will be undertaken by Indus Towers.

The companies say the transaction by them is a step towards delivering on the Telecom Regulatory Authority of India''s (TRAI) recommendations on infrastructure sharing. The primary benefit will be the accelerated expansion of coverage, especially into rural areas, and enables wider access to affordable services for all, helping to meet the government's teledensity targets.

They point out that while operators using Indus's passive infrastructure will continue to run their active infrastructure completely independently, they will be able to enjoy opex savings, enhanced operational efficiency and quicker expansion of coverage.

The formation of Indus Towers will enable telecom operators to reduce operating costs through economies of scale, to the benefit of the subscriber through improved network quality and broader coverage especially, in rural areas.

Indus Towers will be an independently managed and operated company, offering services to all telecom operators and other wireless services providers such as broadcasters and broadband services providers. Indus Towers will have approximately 70,000 sites at inception providing it with significant scale benefits and will undertake a significant rollout of telecom infrastructure to propel the mobile sector towards achieving India tele density and rural coverage goals within the next few years.