MUMBAI: American Tower Corp has acquired the tower assets of Vodafone India and Idea Cellular for Rs. 7,850 crore. The two operators have about 20,000 towers.
While Idea Cellular would get Rs. 4,000 crore, Vodafone would get Rs. 3,850 crore if the tower deal goes through prior to their merger. Vodafone and Idea are in the process of merging operations to create the largest mobile operator in the country.
“The standalone tower businesses of Vodafone India and Idea are pan-Indian passive telecommunication infrastructure businesses, comprising a combined portfolio of approximately 20,000 towers with a combined tenancy ratio of 1.65x as at June 30, 2017,” said a joint statement from Idea and Vodafone.
“Both Vodafone India and Idea as customers, and ATC as a mobile network infrastructure provider, have agreed to treat each other as long-term preferred partners, subject to existing arrangements. The parties will work together to further the expansion of high speed mobile networks in India,” it added.
After Vodafone India and Idea have completed their merger, 6,300 company-located tenancies of the two operators on the combined standalone tower businesses will collapse into single tenancies over a period of two years without the payment of exit penalties.
The receipt of the proceeds from the sale of towers, prior to completion of the merger, was anticipated and provided for in the merger agreement and hence would not affect the agreed terms of the the Vodafone India and Idea merger, including the amount of debt which Vodafone will contribute to the combined company at completion.
For ATC, the deal strengthens its position in the Indian market. The American company had earlier acquired controlling stake in Viom Networks. The new deal makes it one of the strongest tower infra players in the country, along with Bharti Infratel and Indus Towers. Vodafone and Idea have stake in Indus Towers also, but that may be acquired by Bharti Infratel, which in turn is in talks with private equity players for stake sale.
Jim Taiclet, American Tower’s Chief Executive Officer said, “We expect the addition of these two high quality portfolios to be highly complementary to our existing assets and to contribute to long-term leasing growth as India’s leading mobile operators accelerate their 4G network deployments.”
The transactions are expected to generate approximately Rs. 2,100 crore (approximately $320 million) in property revenue and approximately Rs. 800 crore (approximately $120 million) in gross margin during their first full year in American Tower’s portfolio, at current exchange rates.