ATC completes $585m-acquisition of telecom towers from Vodafone India

Photo: REUTERS/Danish Siddiqui

Telecom infrastructure company American Tower Corp. (ATC) on Tuesday said it has completed the acquisition of Vodafone India Ltd’s 10,200 stand-alone towers for around Rs3,800 crore.

“We are pleased to acquire this portfolio, which will complement our existing footprint and help us serve our tenants in India as they expand 4G services in the coming years,” ATC executive vice-president Amit Sharma said in a statement.

Vodafone India and Idea Cellular had in November 2017 separately agreed to sell their respective stand-alone tower businesses in India, totalling 20,000 towers, to ATC Telecom Infrastructure Pvt. Ltd, a subsidiary of ATC, for Rs7,850 crore.

The deal to purchase Idea Cellular’s stand-alone towers for Rs4,000 crore is yet to be completed, though.

“We closed the deal with Vodafone on 31 March. The Department of Telecommunications’ approval is pending for the tower deal with Idea…we hope to receive the approval for it (Idea) shortly,” Sharma told Mint.

The tower sale was announced after Vodafone India and Idea Cellular announced a merger in March 2017. Under the merger plan, the two companies outlined a plan to sell their individual stand-alone tower businesses to strengthen the balance sheet of the combined entity, which would become the largest telecom operator in India.

Together, the two operators would be in a stronger position to take on competition from Reliance Jio Infocomm Ltd, which disrupted the sector with free services in September 2016 and later announced cheap tariffs, dealing a heavy blow to revenue streams of operators.

Vodafone and Idea last month named key individuals who would lead the merged entity. Balesh Sharma, currently chief operating officer (COO) of Vodafone India, will be the chief executive officer (CEO) of the merged entity. The companies expect the merger to complete in the first half of this calendar year.

Operators in the hyper-competitive telecom sector have been selling or paring stake in their non-core assets. While Vodafone India and Idea Cellular are selling stand-alone towers to ATC, Bharti Airtel said it was considering a sale of controlling stake in its tower arm Bharti Infratel Ltd. Bharti Airtel and its wholly-owned arms own 53.51% in Bharti Infratel at present.

In order to monetize its telecom tower infrastructure, the government too, in September last year, announced a plan to hive off BSNL’s tower assets into a separate company fully owned by the public sector enterprise.

Idea Cellular also plans to monetize its 11.15% stake in Indus Towers, which has 120,000 towers across 15 telecom circles in the country. Bharti Infratel and Vodafone India hold 42% stake each in Indus Towers.

Meanwhile, ahead of the tower deal, ATC has completed the merger of its five Indian subsidiaries—ATC India Tower Corp. Pvt. Ltd, ATC Tower Co. of India Pvt. Ltd, McCoy Developers Pvt. Ltd, Transcend Infrastructure Pvt. Ltd and ATC Telecom Tower Corp. Pvt Ltd—with another arm ATC Telecom Infrastructure Pvt Ltd.

ATC had opened its office in India in 2007 and had received its first order to build 175 sites in Bihar and Odisha. In 2010, it consolidated its position in India by acquiring 4,629 towers from Essar Telecom. In 2016, it acquired 51% controlling ownership interest in telecommunications infrastructure company Viom Networks Ltd for Rs58.56 billion. Subsequent to the closing of the deal, Viom was renamed ATC Telecom Infrastructure Private Ltd.

Not including the towers purchased from Vodafone, ATC at present owns or operates over 58,000 tower sites in India. While state-run telecom operator BSNL owns 66,000 towers, Bharti Infratel has a consolidated portfolio of over 91,000 telecom towers, which includes over 39,000 of its own towers and the balance from its 42% equity interest in Indus Towers.

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This article was first published on Livemint.com