American Tower plans to acquire nearly 20,000 telecoms towers held by Vodafone India and Idea Cellular for about $1 billion, The Economic Times (ET) reported.
The two operators, the country’s second and third largest which plan to merge, opted to sell their standalone tower assets to US-based American Tower after parallel negotiations with Brookfield Asset Management and IDFC Project Equity collapsed over valuation differences, a source told ET. The parties are working out the specifics of the deal.
Vodafone owns about 11,000 towers, Idea nearly 9,000. Both companies also own stakes in Indus Tower with market leader Bharti Airtel. Indus operates a portfolio of 123,000 towers.
Earlier this month, press reports said a consortium led by private equity company KKR is looking to raise its stake in Indus from 10 per cent to 45 per cent after Bharti Infratel acquires either all, or most, of the 58 per cent it doesn’t own from Vodafone, Idea and Providence Equity Partners. Vodafone reportedly may retain a stake of up to 10 per cent.
Bharti Infratel’s move would cost in the region of $5.5 billion to $6.5 billion and be conducted as “a leveraged buyout that will largely be funded out of the reserves and cash flow of Indus Towers”, ET reported earlier. Bharti Airtel owns 61.65 per cent of Bharti Infratel, while KKR and Canada Pension Plan Investment Board (CPPIB) have a 10.33 per cent stake after a $954 million investment made earlier this year.
Meanwhile, Reliance Communications (RCom) is in talks to sell its entire tower arm to Brookfield Asset Management following the collapse of a proposed merger with Aircel. Brookfield is reportedly reassessing a deal penned in October 2016 for 51 per cent of Reliance Infratel’s assets, on grounds the death of the proposed merger between Aircel and RCom reduces the guaranteed income from the towers.
The merger between Vodafone and Idea will create India’s largest mobile player with about 411 million connections and a 34 per cent market share. It is expected to close in mid-2018.