Mumbai, March 23: Telecom companies have watched in horror as the recent market meltdown scorched their plans to rake in moolah by spinning off their tower businesses.

The industry had struck a couple of nifty private equity deals two months back that had raised overblown expectations of high valuations. The pundits say tower company valuations — which were going through the roof just over a month ago — have floundered.

Anil Ambani-owned Reliance Infratel, which has 25,000 towers and was planning to divest 10 per cent through an IPO, is on tenterhooks. The company had planned to spend Rs 8,000 crore in the next fiscal and create an asset base of 60,000 towers.

The company was also planning to raise about Rs 5,000-6,000 crore through an initial public offering (IPO), which would have valued the company at Rs 60,000 crore. It has already filed a prospectus with the capital market regulator for the IPO.

But experts say the hyped valuations in an overheated market have disappeared for now. “Those were heady times. For any company, it would make sense to defer the IPO given the current market conditions,” said Prithvi Haldea, chairman and managing director of Prime Database, a company that tracks the primary market.

Haldea says there are 19 IPOs that have secured Sebi clearances, but are unwilling to venture into the choppy waters.

“If the IPOs are deferred and companies decide to raise money through private equity deals, valuations won’t be as high as they were six months back. Companies will have to cut their issue prices,” he added.

Sources at Reliance Infratel refused to say whether the company had put off the issue. Last year, the company raised Rs 1,400 crore by selling a 5 per cent stake, which valued it at Rs 28,000 crore. With a successful IPO, this might have jumped to Rs 60,000 crore.

Rival Bharti Airtel also has plans to list its tower arm — Bharti Infratel — in two years, said company sources.

There are also plans to list Indus, which is a three-way venture among Bharti, Vodafone Essar and Idea Cellular.

“Though the Indian mobile story remains the same, valuations will be lower and companies will have to scale down their expectations,” said Harit Shah of Angel Broking.

Tata Teleservices is also planning to divest up to 49 per cent stake in its tower arm to a private equity player. Recently, Spice Telecommunications sold all of its 875 towers to Srei subsidiary Quipo Telecom Infrastructure for Rs 600 crore. Essar Telecom Infrastructure is also looking for private equity participation to fund its expansion plans.

“Valuations depend on the cash flow and the company’s business plans. If there is no change in business fundamentals, it should not hurt. However, there could be liquidity issues,” said Prashant Singhal of Ernst and Young.