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American Tower Corporation is set to become the second largest telecom tower company in India after it merges with Viom Networks.
The Boston-based company on Wednesday said it has acquired 51 per cent stake in Viom Networks for ₹7,600 crore.
The stake will be purchased from Srei Infrastructure and other minority stakeholders including IDFC Private Equity Fund II and Tata Teleservices.
This is the biggest Foreign Direct Investment into India since the NDA Government took charge last year. Once the deal gets regulatory approvals, ATC will merge its existing Indian operations with Viom, taking the former’s stake in the merged entity to nearly 65 per cent.
The balance 35 per cent will be held by Tata Teleservices Limited, Macquarie SBI Infrastructure Investments, SBI Macquarie Infrastructure Trust and IDFC Private Equity Fund III.
Complete buy-out ATC has the option to acquire the balance 35 per cent stake at a later stage. The combined entity will own 56,000 towers, including 42,200 towers owned by Viom. Only Indus Towers, with over 1 lakh towers, will have more.
The deal comes at a time when demand for towers is expected to increase, as telecom operators look to expand 3G and 4G data services.
Amit Sharma, American Tower’s Executive Vice-President and President (Asia), said: “American Tower will be strategically positioned to benefit from the leasing revenue growth opportunities that will come from the accelerating deployment of 3G and 4G technologies by all wireless carriers in the market.”
Prior to the deal, ATC had only 14,000 towers in India.
For Srei, the deal gets them about ₹3,000 crore, including a ₹340 crore non-compete fee. ATC will also take Viom’s debt of ₹5,812 crore. This puts the enterprise value of Viom at about ₹20,300 crore.
Deal benefit “From Srei’s perspective, the divestment of Viom will have a multi-fold impact for Srei in improving profitability, and will be accretive for both shareholders and Srei,” said Sunil Kanoria, Chairman and Managing Director of Viom, and Vice-Chairman of Srei Infrastructure Finance Limited.
For ATC, this is the biggest deal in India till date. Recently, ATC acquired the telecom tower assets of KEC International Ltd for ₹81 crore. In 2009, ATC had acquired 1,700 towers of Xcel Telecom, founded by former BPL Mobile Chief Executive Officer Sandip Basu, for an undisclosed amount.
In the same year, it announced the acquisition of 400 towers from Kolkata-based tower company Transcend Infrastructure, for about ₹95 crore.
The biggest deal yet, however, came in 2010 when ATC acquired 4,630 towers from Essar Group for about ₹2,000 crore. “With a population of nearly 1.3 billion people, rapidly growing smartphone penetration, and limited fixed line infrastructure, India’s vibrant wireless industry is poised for a sustained period of network investment,” said James D Taiclet Jr, American Tower’s Chairman, President and Chief Executive Officer.
American Tower anticipates consolidating full financial results for Viom after the closing of the transaction.
During the quarter ended June 30, 2015, Viom generated approximately ₹5,000 crore in rental and management revenue.
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