Year: 2007

Idea Cellular has informed us that Bharti Infratel, Idea Cellular and Vodafone India have agreed to form a independent tower company, Indus Towers, to provide passive infrastructure services in India to all operators on a non-discriminatory basis. This follows the infrastructure sharing MoU signed between Bharti and Vodafone in February 2007. Complete analysis on why the GSM Lobby formed this association is available on Convergence India.

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% each and the Idea will own the remaining 16% stake in Indus Towers. New passive infrastructure rollouts in the 16 circles will be undertaken by Indus Towers.

This transaction highlights Bharti, Idea and Vodafone Essar’s commitment to enhancing the sharing of passive infrastructure and takes a firm 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. Indus towers welcomes all operators to become customers. While these operators 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.

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.

Parsvnath Developers has been awarded a contract for construction and development of footwear design & development institute at Fursatganj, Rae bareli, Uttar Pradesh (FDDI) by FDDI, Ministry of Commerce, Government of India, worth Rs 47 crore, approximately and the scheduled date of completion would be end November, 2008.

Another North Indian Developer, Omaxe Constructions in consortium with GVK Power & Infrastructure and Nagarjuna Construction Company has put in bid for the Rs 30000 crore project.

The project is proposed to be executed through a special purpose vehicle on Design, Build, Finance and Operate model by collection of toll in the concession period which is of 35 years and later the assets will be transferred to Uttar Pradesh state government.

Simplex Infra is expected to raise Rs.300-400 Cr through a Private placement. The process is likely to get completed in the next 2 weeks. In our Q2FY08 result update dated Oct 30, we had assumed that Simplex would issue 5 Mn shares at Rs.550, thereby raising Rs.275 Cr. However, since then the stock has run up quite a bit and keeping in mind today’s closing price of Rs.680, we now assume issue of 5 Mn shares at Rs.700. This is likely to lead to reduction in debt levels accompanied by a saving on the interest cost front, thereby improving FY08E EPS from Rs.19 to Rs.20. At this level, the stock would trade at a P/E of 34 times FY08E and 21 times FY09E.