American Tower has reached a long-anticipated agreement to acquire a 51% stake in Indian towerco Viom Networks for a cash consideration of Rs76bn (US$1.17bn). The acqusitive US towerco could later take full ownership of the company.
American Tower (NYSE:AMT) has reached a long-anticipated agreement to acquire a 51% stake in Indian towerco Viom Networks for a cash consideration of Rs76bn (US$1.17bn).
Local cellco Tata Teleservices, the current majority shareholder, will retain part of its holding, while Macquarie SBI Infrastructure Investments, Macquarie SBI Infrastructure Trust and IDFC Private Equity Fund II will retain certain interests, American Tower, Tata Teleservices and Srei Infrastructure Finance, another Viom shareholder, said in a joint statement, without specifying details.
Local media reports earlier this month said the deal would see Tata Teleservices reduce its stake from 54% to about 34%.
American Tower may be required to acquire all or some of the remaining 49%, starting in 2018-2019. As such, Wells Fargo analyst Jennifer Fritzsche said she expects the total transaction, which she described as “timely and strategic”, to be worth about Rs76bn (US$2.3bn).
American Tower will merge its existing 14,000 local towers, held by subsidiary ATC India, with Viom’s 42,000 towers and 200 indoor antenna systems – an arrangement which will see “certain ownership adjustments”, the companies said.
The Boston-based towerco said it will finance the deal, which it expects to close in mid-2016 subject to customary conditions and regulatory approval, “in a manner consistent with maintaining its investment grade credit rating” but, again, did not provide details.
According to the statement, in Q2 Viom generated Rs50bn in rental and management revenue and Rs21bn in gross margin. It had Rs58bn of debt outstanding as of 30 September 2015. American Tower expects the transaction to be immediately accretive to adjusted funds from operations (AFFO) per share.
American Tower received financial advice from Evercore and Kotak Investment Bank and legal advice from Clifford Chance, AZB & Partners and Luthra and Luthra. Viom’s exclusive financial adviser was Credit Suisse, while Cyril Amarchand Mangaldas provided legal counsel.
American Tower chairman, president and CEO, James Taiclet, said that with a population of nearly 1.3 billion, fast growing smartphone penetration and limited fixed-line infrastructure, India’s wireless market is “poised for a sustained period of network investment”
“ATC India’s greatly expanded portfolio of towers will enable us to play a key role in providing the communications real estate essential to the deployment of advanced wireless technologies throughout the country and to support the Indian government’s Digital India initiative.”
Sunil Kanoria, chairman and managing director of Viom and vice chairman of Srei said Viom has a “robust cash flow stream, the highest tenancy ratio in the industry and a well-diversified tenant mix”.
“We are pleased to have found a new management team for Viom and believe that ATC is well positioned to continue to optimise these assets given its proven track record success.”
Tata Teleservices said its partnership with ATC will help it to leverage an enhanced infrastructure portfolio to better address the growing market for next-generation services.
American Tower has a global portfolio of about 97,000 owned or managed sites, most in its core US market. It is also present in Latin America (Brazil, Chile, Colombia, Costa Rica, Mexico and Peru), Africa (Ghana, Nigeria, South Africa and Uganda) and Germany.
In April, it agreed to buy 381 sites from Indian infrastructure firm KEC International for about Rs810m (US$13m).
