American Tower (NYSE:AMT) is reportedly close to reaching an agreement to acquire a majority stake in Indian towerco Viom Networks following protracted negotiations.
American Tower (NYSE:AMT) is reportedly close to reaching an agreement to acquire a majority stake in Indian towerco Viom Networks following protracted negotiations.
The board of American Tower, which has long been linked to Viom but failed to reach an agreement on price, is expected to approve the deal this week, the Economic Times cited a person familiar saying. The deal values reportedly the target at about Rs190bn (US$2.84bn), including some Rs6.5bn (US$97.24m) of net debt.
India’s Tata Group, which has a 54% stake in Viom via its Tata Teleservices unit, will retain a stake of up to 26%, the report stated. This is to assure the Boston-based towerco that Tata Tele will lease towers from Viom on a preferential basis.
Conglomerate Srei, which has a minority stake in Viom, is reportedly set to exit the towerco completely.
Sunil Kanoria, vice chairman of Srei and vice chairman and managing director of Viom (pictured), was cited saying that work on the deal “has been going on”, without providing further details.
Credit Suisse and Citigroup are reportedly advising Viom on the deal.
Last December, local reports stated that American Tower was close to acquiring a 41% stake in Viom for up to US$1bn, planning to merge it with its local ATC India unit.
However, negotiations were said to have fallen apart on price, with American Tower failing to meet the reported 12x EBITDA asking price.
Viom, which according to data from Deloitte Research & Analysis, has 11.3% of the country’s telecoms towers and 14.8% of tenancies, has also considered an IPO. However, Kanoria was quoted in mid-July this year saying that plans had been postponed from December this year to March 2016 due to weakening market conditions.
The Indian tower sector is ripe for M&A, with numerous telcos, towercos and private equity firms considering potential deals. In addition to the Viom sales process, telco Reliance Communications said last month that it had received non-binding bids from “a number” of interested parties for a controlling stake in its tower unit Reliance Infratel. While RCom did not name the bidders, local reports in June said American Tower and US private equity firm The Carlyle Group were leading the process.
Internationally acquisitive American Tower, which agreed earlier this year to buy sites from KEC International for about Rs810m (US$13m), is expected to play a key role in consolidation.
Commenting on the American towerco’s talks with Viom in July, a sector source told TelecomFinance that a deal between the two would have created the country’s second largest towerco, giving American Tower that all-important “critical mass”.
American Tower, Viom, Srei and Tata Teleservices were not immediately available for comment.