American Tower to buy 51% stake in Viom Networks for Rs 7,600 crore

Telecom towers
American Tower Corporation (ATC) announced its deal to buy 51 percent stake in Indian telecom tower company Viom Networks for Rs 7,600 crore in cash.

The telecom tower deal indicates that Tata Group will divest a substantial stake of nearly 54 percent in Viom Networks.

Viom Networks currently owns and operates approximately 42,200 wireless towers and 200 indoor distributed antenna systems across India.

The remaining minority share holders of Viom Networks will be Tata Teleservices (TTSL), Macquarie SBI Infrastructure Investments, SBI Macquarie Infrastructure Trust and IDFC Private Equity Fund III, said ATC in a statement.

Under the agreement, American Tower may acquire or be required to acquire all or a portion of the remaining 49 percent stake in Viom.

Post-closing, American Tower will merge its existing 14,000 towers with Viom, resulting in certain ownership adjustments.

Recent ATC tower deals

# KEC International’s towers for Rs 81 crore
# 1,700 towers of Xcel Telecom
# 400 towers from Transcend Infrastructure for Rs 95 crore
# 4,630 towers from Essar Group for Rs 2,000 crore
# 11,300 towers from Verizon for 5 billion

James D. Taiclet, Jr., chairman, president and chief executive officer of American Tower, said: “ATC India’s expanded portfolio of towers will enable us to play a key role in providing the communications real estate essential to the deployment of wireless technologies throughout the country.”

Viom generated approximately INR 50 billion in rental and management revenue and approximately INR 21 billion in gross margin during the quarter ended June 30, 2015.

Amit Sharma, president – Asia, American Tower, said: “Through our joint ownership with the Tata Group of over 56,000 towers, 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 of the wireless carriers in the market.”

American Tower handles approximately 97,000 communications sites across the world.

ATC to gain from 3G and 4G roll outs

Telecom network operators such as Vodafone India, Idea Cellular, BSNL, Aircel, Reliance Communications, Bharti Airtel are in the process of expanding their 3G networks. Reliance Jio Infocomm, Vodafone, Idea Cellular and Airtel will also expanding their 4G presence.

“With telecom operators launching 4G aggressively, we could see the top three operators adding nearly 100,000 to 150,000 sites over next 12 months. We estimate an incremental 30,000 for Bharti Infratel in FY 2017,” said Morgan Stanley recently.

Morgan Stanley says the spectrum sharing guidelines approved by the India government will not impact telecom tower companies in India. Recently, Reliance Jio Infocomm and Reliance Communications announced sharing of spectrum that will enable to them to cut costs.

“Contiguous spectrum increases network capacity nonlinearly, but the sharing benefit needs to justify the 0.5% hike in spectrum usage charge for both the operators sharing the spectrum. The possible buyers of any spectrum would need to pay out the typical long-term contract (6-12 years) as exit fees, which largely equates to all the future revenues expected,” said Morgan Stanley.

The telecom tower deal of American Tower does not make significant changes in the industry. Indus Towers, a three-way joint venture among Idea Cellular, Vodafone and Bharti Airtel, has a presence in 15 major telecom circles of India.

Indus Towers, the main rival of America Tower, has achieved over 261,159 tenancies till date, a first in the telecom tower industry globally. Indus Towers, the largest telecom tower company in the world, has more than 117,579 towers.

Baburajan K
[email protected]

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