American Tower Corp (ATC) has paid around Rs 3,850 crores to buy 10,200 towers from Vodafone India, completing the first tranche of a deal where the US company will also pick up Idea Cellular’s towers for Rs4,000 crore, bolstering the two merging telcos with much needed cash to better compete in a brutal market.
“Vodafone India has completed the sale of its standalone tower business in India to ATC Telecom Infrastructure Private Limited for an enterprise value of Rs 3850 crore,” Vodafone said in a press release Tuesday.
It added that both Vodafone and Idea – which are merging to create India’s largest telecom company – are selling their respective standalone towers “to strengthen the combined financial position of the merged entity.” The Idea-Vodafone merger is expected to be completed by June 30, though many expect it to close earlier in May itself.
“Completion of Idea’s sale of its standalone tower business to ATC is also expected in the first half of this calendar year,” Vodafone said. ATC is slated to pay Idea Cellular Rs 4,000 crore for its 9800 towers.
ATC ruled out any delay in the Idea deal and expects it to be closed shortly. “The deal is currently going through the regulatory process which is now managed by the Department of Telecommunications (DOT). Now that Vodafone deal is complete, the Idea deal can happen shortly,” Amit Sharma, president ATC Asia told ET. “We have not heard of any delay and it is moving in its normal course. DoT said it (Idea deal) is in advanced stage of approval,” Sharma added.
For Idea and Vodafone, this deal is crucial since selling off their towers would help the loss-making telcos pare debt and be better equipped to take on new entrant Reliance Jio and leader Bharti Airtel. Vodafone and Idea are also exploring the sale of their respective 42% and 11.15% stakes they separately own in Indus Towers. Vodafone’s stake in Indus is not a part of the merger pact, unlike Idea’s 11.15%.
“We are pleased to acquire this (Vodafone) portfolio, which will complement our existing footprint and help us serve our tenants in India as they expand 4G services in the coming years,” said Sharma.
ATC Telecom Infrastructure, a majority owned Indian subsidiary of ATC, bought the towers from Vodafone Mobile Services Ltd. and Vodafone India Ltd.
These two tower deals will cost ATC $1.2 billion in cash, but is expected to generate approximately Rs 2,100 crore in property revenue and approximately Rs 800 crore in gross margin its first full year in ATC’s portfolio, as per the announcement earlier made by the company.
ATC, one of the world’s largest independent tower companies, has been silently augmenting its towers portfolio in India ever since it bought a 51% stake in Viom Networks for Rs 7,635 crore in the largest inbound acquisition in FY16.
Buyout of Vodafone and Idea’s captive towers would boost ATC’s India towers portfolio to nearly 80,000, taking it closer to Indus Towers and Bharti Infratel with 1,23,00 and 91,000 towers, respectively. The tower firm, in a consolidation mode, is also in talks with Tata Teleservices to acquire the Tata Group company’s residual 26% stake in Viom as a fallout of Tata Teleservices selling its consumer mobile business to Bharti Airtel.
Source: Economic Times