ATC India set to buy majority stake in Viom Networks

ATC, that has over the years largely accumulated telecom towers in India through mergers will fold its various arms in India into Viom to create one composite entity with over 54,000 towers.

American Tower Corp has agreed to buy a 51 per cent controlling stake in Indian mobile mast operator Viom Networks for Rs.7,600 crore ($1.17 billion) to expand in the world’s second-biggest telecommunications market by number of users. It did not give details of the sellers but SREI Infrastructure Finance in a separate disclosure said current managing shareholder Kanoria Group besides several others including lead PE investor IDFC Alternatives and JV partner Tata Teleservices will sell shares. Indeed, ATC said it may acquire or may be required to buy the remaining stake in Viom to make it a wholly owned business.

Viom generated about 50 billion rupees in rental and management revenue and 21 billion rupees in gross margin for the three months to June 30, American Tower said.

American Tower and Tata Teleservices did not immediately reply to emails seeking comment.

“The decline in growth of voice usage along with industry developments and regulations in India have raised concerns about the growth of independent tower businesses, thereby affecting their cash flows and debt repayments”. Reliance Jio Infocomm, Vodafone, Idea Cellular and Airtel will also expanding their 4G presence. Bharti Airtel also owns a separate public listed tower arm Bharti Infratel that in turn owns 42 per cent stake in Indus Towers.

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. “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.

American Tower expects the deal to be immediately accretive to its AFFO/share.

Indus Towers, the main rival of America Tower, has achieved over 261,159 tenancies till date, a first in the telecom tower industry globally.

American Tower launched its operations in India in 2007 and has more than 14,000 towers nationwide.