American Tower Corp (ATC) is reportedly considering a sale of its wholly owned Indian unit, ATC Telecom Infrastructure Pvt Ltd (ATC TIPL), after its efforts to sell a 50% stake failed to attract any buyers. The tower company is said to be open to selling a majority stake or even 100% ownership and exiting the country.
According to an ET report, ATC has re-engaged with Canada’s Brookfield, which is evaluating a full buyout and has held separate discussions with US infrastructure fund Stonepeak Partners. It has also approached Macquarie and KKR & Co through its advisors, although discussions with the latter two are believed to have been lukewarm.
Stonepeak, with $55 billion of assets under management, has no presence in India, but it is a stakeholder in ATC’s US data-centre business. It has also backed wireless infrastructure ventures such as Vertical Bridge and Globe Telecom Towers in the Philippines. It is not yet clear if Stonepeak is looking for a full 100% acquisition or majority control.
Brookfield, on the other hand, already owns Summit Digitel, which houses the telecom towers acquired from Reliance Jio. The company is believed to be interested in a 100% acquisition of ATC TIPL, although valuations remain a sticking point.
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ATC is looking for an enterprise value upwards of $4 billion for its Indian unit, largely due to its strong India tower assets portfolio, which stood at 76,826 towers as of December 2022. However, potential buyers are unwilling to pay any control premium and are negotiating for a $2.8-3.0 billion valuation. They are reportedly concerned about the sustainability of the tenancy revenue inflows in the future, given the continuing financial struggles of Vodafone Idea (Vi), ATC’s biggest customer in India.
ATC had initially planned to sell a 50% stake in its Indian unit, which implied co-control with a potential equal partner. However, the lack of buyer interest has forced the company to change its strategy swiftly.
According to one of the sources mentioned in the original report, “ATC is unwilling to price its India towers below $50,000 apiece, while a potential buyer like Brookfield isn’t convinced if it can recover its money from those towers via steady tenancy revenues amid key customer Vi's grim financials.” Discussions are said to be stuck around valuations, as any bulk acquisition of tower assets without assured long-term tenancy revenue would pile up costs for a potential buyer.
ATC's exploration of options for its Indian unit comes at a time when India's telecom industry is undergoing significant consolidation. With the ongoing financial struggles of Vodafone Idea and increased competition from Reliance Jio and Bharti Airtel, potential buyers are likely to approach the negotiations with caution. However, ATC's strong tower assets portfolio could still attract interested parties, and a successful sale could provide the tower company with much-needed funds for further expansion.