American Tower boosts India footprint with RM5b deal

by BLOOMBERG

MUMBAIAmerican Tower Corp (ATC) agreed to buy mobile-phone towers from Vodafone Group plc’s Indian business and Idea Cellular Ltd, boosting its infrastructure in the country by a third, as the merging carriers sell off assets to raise cash for debt repayment amid a scathing price war.

The Boston-based real estate investment trust agreed to pay 78.5 billion rupees (RM5.02 billion) for about 20,000 towers owned by the carriers in a deal that is expected to be completed in the first half of 2018, ATC said in a statement yesterday. The assets will probably generate about US$320 million (RM1.34 billion) in property revenue and US$120 million in gross profits for their first full year under ATC, according to the statement.

The facilities add to the company’s base of 58,000 towers nationwide in India, serving all the major carriers amid a sweeping consolidation that includes a merger by Vodafone India and Idea Cellular that will overtake Bharti Airtel Ltd as the country’s largest wireless service provider.

That combination will also reduce the tenancy ratio — or the average number of operators per tower — on the facilities ATC agreed to buy, as about 6,300 overlapping sites will be removed, according to Chris Lane, an analyst at Sanford C Bernstein & Co.

The tower deal’s valuation is “on the low side”, because the tenancy ratio is low and set to fall after the merger, Lane said in an email.

The tenancy ratio is expected to rise to 2.9 times by March 2020, from about the 1.95 times average for India as of 2015, according to a study last year by the Associated Chambers of Commerce and Industry of India and audit firm KPMG. — Bloomberg