See huge headroom to boost tenancy ratio: Bharti Infratel

Bharti Infratel (BIL), one of the largest tower infrastructure companies, opened its 18.89 crore shares initial public offer for subscription. The price band for the issue is fixed at Rs 210-240 a share. With 81,000 towers, it will be the largest listed tower company globally.

It aims to raise around Rs 3,967-4,534 crore through this issue.

Speaking to CNBC-TV18 about the issue, Akhil Gupta, vice chairman & managing director, Bharti Infratel says he sees significant headroom for improving the tenancy ratio.

Broking firm Nomura is relatively more bullish on tower companies. Relative to those of the operators, cashflow, churn and margins of the towercos are more appealing, says a Nomura report.

"The projections which are part of the red herring prospectus (RHP) say that from 1.7, which is the industry average, it will go to 2.46 over five years. We are already at 1.9, so we should be able to maintain that lead," Gupta adds.

Meanwhile, Nomura expects BIL's tenancies to rise moderately. Given data and voice growth along with limited spectrum, its tenancies may rise to 2.2 times by FY15F versus the current 1.9 times, the report adds.

It also highlights that the average monthly rental for tower companies in India is USD 800, which is well below USD1.5-2000 in Indonesia and the US.

Below is the edited transcript of Akhil Gupta's interview with CNBC-TV18.

Q: Investors are grappling with growth as they value your issue. Your tenancy ratio went up from 1.6 two years back to 1.85. Is there more headroom or do you see growth plateauing out here?

A: There is a tremendous amount of headroom and unfortunately as per the rules I can't talk about my projections. But I can refer from the analysis projections which are part of the red herring prospectus (RHP), their projection is from 1.7, which is the industry average, it will go to 2.46 over five years. We are already at 1.9 so I do assume that we should be able to maintain that lead.

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