India: ATC to buy tower assets from Vodafone, Idea for $1.2b

Vehicles drive past mobile-phone telecommunications towers in Mumbai, India, on Wednesday, Jan 29, 2014. Photographer: Dhiraj Singh

American Tower Corp. agreed to buy mobile-phone towers from Vodafone Group Plc’s Indian business and Idea Cellular Ltd. for 78.5 billion rupees ($1.2 billion).

The agreement, subject to closing conditions and regulatory approval, is expected to be completed during the first half of 2018, ATC said in a statement on Monday. The assets will probably generate about $320 million in property revenue and $120 million in gross profits for their first full year under ATC, according to the statement.

Idea, controlled by billionaire Kumar Mangalam Birla, reported its fourth straight quarterly net loss Monday amid intensifying competition after Reliance Jio Infocomm Ltd. entered the market last year with offers of free voice services. Idea shares fell 2.6 percent to 94.50 rupees as of 11:49 a.m in Mumbai, paring their gain this year to about 27 percent.

“Second quarter earnings were bad and the tower deal valuation is not great,” said Naveen Kulkarni, co-head of research at Phillipcapital India Pvt Ltd. in Mumbai on phone. “These reasons, plus the recent run up in the stock, could be causing the correction now.”

The Tower purchase would give Boston-based ATC, which operates almost 150,000 communications sites globally, an additional 20,000 towers in a country with more than 1 billion mobile-phone subscribers.

The deal also comes as Idea seeks to pay down debt as it prepares to merge with Vodafone India to surpass Bharti Airtel Ltd. as the country’s largest phone operator by subscribers.

Idea will use proceeds from the tower sale to expand 4G coverage as well, Himanshu Kapania, the carrier’s managing director, said by phone Monday. He declined to specify how much of this sum will be used to repay debt.

ATC had competed against Canadian alternative asset manager Brookfield Asset Management Inc. for the assets, people with knowledge of the matter said earlier this year.

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