ATC to buy Tata Teleservices, IDFC PE stake in mobile tower arm for $397m

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US-based American Tower Corporation (ATC) has entered into an agreement to buy Tata Teleservices Ltd’s (TTL) 50 per cent shareholding and IDFC Private Equity’s entire stake in its India unit ATC Telecom Infrastructure Pvt Ltd (ATC TIPL) for Rs 2,940 crore ($397 million), it said in a filing on Wednesday.

“The company has received notice from Tata of exercise of put options with respect to 50% of its holdings of ATC TIPL and has also received notice from IDFC of exercise of put options with respect to 100% of its holdings of ATC TIPL,” the filing said. TTL will have option to sell another 50 per cent stake in ATC TIPL in the beginning of next fiscal year.

TTL, the mobile division of Tata Sons, has also offered to pay $320 million or about Rs 2,360 crore as one-time settlement to ATC TIPL for termination of lease obligations following closure of its mobile services business and it affiliates. Correspondingly, approximately 80 per cent of TTL’s tenant revenue will be churned out of the company’s tenant billings run rate, effective November 1, 2018, it added.

The company expects to complete the redemption of the put shares in the first quarter of 2019. Post acquisition, ATC will hold an ownership interest of approximately 79 per cent in its India operations.

“Subsequent to the end of the quarter, we reached a comprehensive agreement with the Tata Group that we believe preserves our ability to achieve our long-term return on investment objectives in India. We expect that this agreement, along with the acquisition of about 20,000 Vodafone and Idea towers earlier this year, will position American Tower to benefit from the anticipated recovery in the Indian mobile market,” ATC said.

In one of the largest foreign direct investment in telecom sector, ATC bought 51 per cent stake in Viom from Tata Teleservices Ltd and SREI Infrastructure Finance for Rs 7,635 crore in October 2015. After acquiring majority stake, ATC named the firm as ATC TIPL.

Post acquisition, TTL’s stake in ATC TIPL dropped to 26 per cent. ATC later merged its wholly-owned subsidiary with ATC TIPL which increased its shareholding in the tower firm to 63 per cent. Other shareholders in ATC TIPL include Tata Sons, IDFC Private Equity Fund III, Macquarie SBI Infrastructure Investments Pte Limited and SBI Macquarie Infrastructure Trust.

ATC TIPL is India’s second-largest independent tower firm with a portfolio of about 78,000 towers.