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Idea looking to divest towers unit for $1B

Indian number three Idea Cellular is reportedly seeking a buyer for its tower unit for $1 billion after abandoning its previous plan of selling a minority stake.

The operator has reportedly contacted potential buyers including America Tower, Bharti Infratel and Brookfield Infrastructure Group. Idea also has a stake in Indus Towers as part of a joint venture with Bharti Airtel and Vodafone India, but is unlikely to divest this.

While Idea has thus far not commented on a potential sale, it has previous expressed its desire to “monetise” its tower assets as a way of reducing its debt. The operator’s Infrastructure Services subsidiary has as tenancy ratio of 1.68 across its 10,000 towers. With its year-on-year financing costs increasing more than threefold, Idea’s H1 earning were down significantly.

As mobile operators around the world feel the pinch on their margins, many are divesting tower assets in order to cut debt. The board of Indian market leader Bharti Airtel has approved the potential sale of a holding in tower unit Bharti Infratel, while number four Reliance Communications has signed a non-binding agreement to sell a 51% stake in its tower unit to Brookfield with the proceeds used “solely to reduce its debts”.

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