In the biggest turnaround in the telecom space, tower company GTL Infrastructure Ltd (GTL Infra) will emerge debt free in the next 3-4 years, while it has completed a Strategic Debt Restructuring (SDR) exercise. GTL Infra is a Global Group company, while the other companies in the fold are network services firm GTL and passive infrastructure sharing firm Chennai Network Infrastructure Ltd (CNIL).
CNIL was a special purpose vehicle formed to park Aircel’s 17,500 telecom towers and 21,000 tenants, which it bought in 2010 for ₹8,400 crore.
As part of SDR, CNIL will merge with GTL Infra in 1:1 share ratio for which it got approvals as per regulatory filings.
GTL Infra has completed its first step in the SDR process last week. This includes reducing debt of its combined tower companies (GTL Infra and CNIL) to a sustainable level of ₹4,800 crore, including proposed restructured amount of bonds.
A total of 22 lenders, led by Union Bank of India, have converted ₹4,500 crore of debt into equity.
As per regulatory filings, combined EBITDA for FY16-17 is expected to be around ₹1,120 crore. At this rate, GTL Infra would generate close to ₹1,300-1,400 crore in EBITDA over the next 12-18 months.
“The net debt of the company is expected to be below ₹3,500 crore by March 2018 on the basis of cash and revenue being generated. The debt to EBIDTA ratio post SDR in FY18 would be nearly 3:1, which is healthy and sustainable given the long term 5-15 years annuity contracts the company has,” a company source said.
To pare debtThe Global Group had a peak debt of ₹19,574 crore in 2008 and the group paid ₹7,000 crore to lenders without fresh borrowings in the past nine years. Now, it is looking at bringing the debt down to ₹3,800 crore by FY18.
“Now that the company has right-sized the debt, the management, bankers and bondholders will look at inducting a new investor to maximise the value to lenders,” said Abizer Diwanji, head of financial services and restructuring at EY.
“With GTL Infra adding more than 11,000 tenancies (number of operators on a tower) during the past two financial years, the turnaround would mainly come in through organic growth,” an investor in GTL Infra’s bonds, who declined to be identified, said.
GTL Infra, which had about 7,198 tenants as of 2008-09, now has 50,800 tenants as of March 31, which is expected to cross 60,000 by 2018-19 .
“Our vision is to ensure that lenders get full value of the debt and equity. This would be the first case where lenders will recover entire value of the loan and maximum value for equity in a time-bound manner,” Global Group Chairman Manoj Tirodkar said.