Bharti plans Rs4,500cr IPO in tower arm Bharti Infratel

Bharti Airtel, India's largest mobile phone company by subscribers, plans to raise about $1 billion (Rs4,500 crore) through an initial public offering (IPO) in its tower arm, Bharti Infratel, according to unconfirmed but generally reliable reports.

Apart from raising funds to improve infrastructure in its newly-acquired African business, the sale of a 10 per cent stake in Bharti Infratel could also provide an exit route to companies that have invested in the tower business.

Bharti Infratel in late 2007 received a $1 billion investment from Goldman Sachs, Citigroup, Macquarie Securities, Dubai Investment Bank, AIF Capital, IEP and Singapore's Temasek. Early the following year, Kohlberg Kravis Roberts, the US private equity group, agreed to invest a further $250 million for a 2 per cent stake in the business.

The proposed IPO is likely to value the company at about $10 billion, 20 per cent lower than the valuation it had in February 2008. Since the company had raised $1.25 billion in 2007-08 from private equity firms, it needs to give them an exit option, said reports.

Talks between Bharti and bankers are understood to be at a very early stage. Morgan Stanley and Standard Chartered are among those in talks to manage the process. Bharti is also said to be in discussion with two other investment banks.

However, both Bharti and the banks concerned have refused to comment officially on the matter.